Value for Money and Policy Review of Information ...s3.amazonaws.com/zanran_storage/ · Working Group, principally Audrey ... contracts for external resources. 1 Mr. Eug ene C reighton

Value for Money and Policy Review of Information Technology External Resources Expenditure in

2006

December 2007

Revenue VFM Review of Information Technology External Resources Expenditure

Preface to the Value for Money and Policy Review of Information Technology External Resources Expenditure

This preface has been prepared by the Steering Committee established to guide and oversee the production of this report. The report was co-authored by the Revenue Working Group, principally Audrey Fleming, in association with Deloitte Consulting. References in this report to the Review Team include the Revenue Working Group and Deloitte Consulting.

The Steering Committee met on a monthly basis during the period March to November 2007 and worked closely with the Review Team in the development of this report.

The members of the Steering Committee are as follows:

Mr. Liam Irwin (Chairman) Deputy Secretary, Revenue

Mr. Eugene Creighton1 Strategy Management Branch, Revenue

Mr. Paddy O’Shaughnessy Administrative Budget Branch, Revenue

Mr. Sean Cosgrove ICT&L Division, Revenue

Mr. Noel Faughnan ICT&L Division, Revenue

Mr. Michael McCarthy2 CMOD, Department of Finance

Mr. Liam Ryan, Director of ICT and Mr. Paul Dowling, ICT&L Division, were co-opted to the Steering Committee in July, 2007.

Background to the Review

This review consists of a Value for Money and Policy Review (VFM) of approximately €27m expenditure on Information Technology External Resources in 2006. The review was carried out under the terms of the Government’s VFM programme.

Due to the scale and complexity of Revenue’s ICT projects and systems, the requirement to deliver them quickly, and the limited availability of in-house ICT resources to undertake the portfolio of ICT developments, Revenue engages external resources to assist in the development of certain projects and to provide ongoing maintenance of some of its systems.

The focus of this review is on the management of this expenditure and the value for money obtained from it. This expenditure related primarily to services provided by one prime contractor in respect of eight application areas. The review also presented opportunities to:

• Further inform Revenue’s approach to the use of IT external resources; and

• Highlight areas where enhanced value for money can be attained from future contracts for external resources.

1 Mr. Eugene Creighton replaced Mr. Gerard Moran following his transfer to another Division 2 Mr. Michael McCarthy resigned from the Committee following his re-assignment to new duties.


Review Conclusions and Recommendations

Overall Conclusion

The Steering Committee has reviewed this report and endorses the conclusions and recommendations of the Review Team. The overall conclusion of the review is that expenditure on ICT external resources was well managed and delivered value for money. The review also:

• Identifies a number of areas where there is scope for enhanced effectiveness and efficiency in the delivery of the ICT programme objectives; and

• Proposes a range of measures to enhance the value obtained from this expenditure largely through the implementation of a range of best practice techniques and tools.

These conclusions and recommendations are discussed in more detail below.

The Review Team acknowledge that, prior to the initiation of this VFM project, Revenue had already completed an evaluation of how it could reduce its reliance on and requirement for external resources and maximise value from necessary spending in this area. The outcome of these deliberations is reflected in the ICT Strategy 2006-2008. This document outlines proposals for a new multi-sourcing strategy, the expansion of Revenue’s in-house ICT capacity and the introduction of improved project management structures. The Review Team acknowledges that many of the recommendations and the best practice techniques proposed have already been implemented or are in the process of being implemented as a result of the earlier in-house evaluation.

Summary of Key Conclusions

The key conclusions of this review are as follows:

• The objectives of Revenue’s ICT external resources expenditure are valid and highly compatible with Revenue’s business and ICT strategies;

• There were significant and highly productive outputs and outcomes associated with external resources expenditure which assisted Revenue to deliver on its business objectives;

• External resources expenditure was effective in delivering the objectives of the various ICT projects as evidenced by the successful delivery of all its major projects, the provision of enhanced services to Revenue personnel, and the provision of additional functionality and service to the general public and business users;

• Business cases were generally strong, but should be formalised and standardised;

• Revenue needs to put in place a formal benefits realisation programme;

• Quality and Risk Management processes for the various projects were acceptable, but could be improved;

• Revenue has a strong project governance infrastructure in place;

• Project management was good for the projects, but could be more formalised and standardised;

• There is scope to build up internal ICT resources and replace external resources expenditure in certain areas;

• Revenue’s mission-critical business and ICT objectives warrant expenditure on external resources on a current and ongoing basis;

• Revenue has become heavily dependent on a single provider of external resources over the past several years; and

• Revenue should progress its multi-sourcing strategy and put in place different engagement models for different types of services.


Implementation of Key Recommendations

The key recommendations of this review relate primarily to the:

• Use of more formal project and programme management methodologies and best practice techniques;

• Expansion of internal resources and skills; and

• Implementation of a multi-sourcing strategy.

The Steering Group notes that a number of the best practice techniques proposed by the Review Team have either been partially or fully implemented by Revenue, namely:

• The introduction of a more formal business case process for expenditure over €250,000 (piloted in 2006);

• Plans to put a formal benefits capture and quantification procedure in place for the new Customs AEP system (scheduled for January 2008);

• The implementation of a professional and independent Testing and Quality Assurance function (piloted as part of the AEP project);

• The successful implementation of a new Release Management function to co-ordinate software releases in the complex Revenue end-to-end environment;

• The continued evolution and refinement of Revenue’s project management and reporting processes based primarily on the Revenue Development Methodology and the use of an “earned value” approach to project management;

• The progress already made to expand and enhance Revenue’s internal ICT resources and skills through the recruitment of administrative officers;

• The implementation of Revenue’s multi-sourcing strategy to drive competition and increase VFM. A new contract and procurement unit is in place. It has successfully concluded the first tendering exercise in the new “sourcing” strategy with a new contract signed with an alternative contractor in latter half of 2007 to supply a number of IT services. Three further Requests for Tenders have been issued for a variety of fixed price and framework contracts relating to application development and support; and

• The decision to establish a Project Management Office to further strengthen project and programme governance and to provide a mechanism for better portfolio management.

The range of other best practice techniques suggested by the Review Team will be assessed to determine their suitability for and relevance to Revenue’s ICT programme.

In line with the Value for Money and Policy Review guidelines, progress on the implementation of the key recommendations of this review will be reported on in our Annual Reports.


Table of Contents

Section 1 Executive Summary.................................................................................................1 1.1 The Revenue Commissioners.........................................................................1 1.2 Objectives of External Resources Expenditure..................................................4 1.3 Current Validity of Objectives of External Resources Expenditure and Compatibility with ICT Programme Strategies .............................................................................4 1.4 Outcomes Associated with External Resources Expenditure................................5 1.5 Extent to which the programmes’ objectives have been achieved, and effectiveness with which they have been achieved.......................................................................6 1.6 Level and trend of costs and staffing resources associated with the programme and efficiency with which they have achieved their objectives ..........................................8 1.7 The degree to which the objectives warrant expenditure on a current and ongoing basis and scope for alternative approaches to achieving these objectives on a more efficient and/or more effective basis ..................................................................... 11 1.8 Potential performance indicators that might be used to monitor and evaluate the efficiency and effectiveness of future IT External Resources expenditure.................... 12 1.9 Putting value at the centre of all ICT investments........................................... 14

Section 2 Background to the Review and Terms of Reference .............................................15 2.1 Scope of this VFM Review ........................................................................... 15 2.2 Terms of Reference.................................................................................... 15 2.3 Organisation of the Review ......................................................................... 16 2.4 Review Methodology .................................................................................. 16 2.5 Our Approach to the Review........................................................................ 17 2.6 Methodologies used ................................................................................... 18

Section 3 Introduction and Overview.....................................................................................20 3.1 Economics and Demographics ..................................................................... 20 3.2 The Revenue Commissioners....................................................................... 20 3.3 Characteristics of Public Sector ICT .............................................................. 23 3.4 Characteristics of Revenue ICT .................................................................... 25 3.5 Context for IT External Resource Requirements ............................................. 26

Section 4 Objectives of and Rationale for the Programmes ..................................................27 4.1 Key ICT Objectives .................................................................................... 27 4.2 Integration Taxation Systems (ITS) Overview................................................ 28 4.3 Overview of ICT Expenditure Trend and Budget Projections ............................. 33 4.4 ITS Business Taxes.................................................................................... 34 4.5 PAYE ....................................................................................................... 37 4.6 Case Management ..................................................................................... 42 4.7 Business Intelligence ................................................................................. 44 4.8 Technical Architecture and Standards ........................................................... 46 4.9 Customs Automated Entry Processing (AEP) .................................................. 49 4.10 Revenue On-Line Services .......................................................................... 56 4.11 Other Items.............................................................................................. 60 4.12 Table showing projected and final expenditure outturn.................................... 63 4.13 Alignment of Expenditure with Revenue’s Strategic Objectives ......................... 65

Section 5 Analysis of Expenditure .........................................................................................67 5.1 Overall External Resources Expenditure ........................................................ 67 5.2 ITS Expenditure ........................................................................................ 68 5.3 ROS Expenditure ....................................................................................... 69 5.4 Customs AEP Expenditure ........................................................................... 69 5.5 Comparative Analysis of Expenditure............................................................ 69


Section 6 Cross Programme Findings and Recommendations .............................................71 6.1 Introduction.............................................................................................. 71 6.2 Business Case and Benefits Realisation ......................................................... 71 6.3 Procurement of External Resources .............................................................. 72 6.4 Quality and Risk Management ..................................................................... 76 6.5 Internal Resource Team and Skills Management............................................. 78 6.6 Governance .............................................................................................. 80 6.7 Project, Programme, and Portfolio Management ............................................. 82 6.8 Utilisation of External Resources .................................................................. 85 6.9 Performance Management and Key Performance Indicators ............................. 86 6.10 Continued Relevance and value for money................................................. 88

Appendix 1: Evaluation Framework ........................................................................................................89 Appendix 2: Acronyms used in VFM report...........................................................................................106 Appendix 3: End User Survey ...............................................................................................................109 Appendix 5: VFM Stakeholder Meetings...............................................................................................115 Appendix 6: Detailed Alignment with Objectives ...................................................................................116 Appendix 7: Quality Assessment by External Evaluator .......................................................................119


Section 1 Executive Summary

1.1 The Revenue Commissioners Revenue is the Irish Tax and Customs Administration. It is responsible for the administration, assessment and collection of taxes and duties and the implementation of customs laws. Its mission is to serve the community by fairly and efficiently collecting taxes and duties and implementing import and export controls. It also performs agency work on behalf of other Government Departments. It employs approximately 6,500 staff located in 130 offices throughout the country.

Revenue’s Statement of Strategy 2005-2007 identifies the following three high-level goals:

• Ensure everyone complies with their tax and customs responsibilities;

• Be a capable, flexible, results-oriented organisation; and

• Play our part nationally and internationally.

Against a background of strong economic growth the total tax revenue collected in Ireland has increased steadily to reach €62.3bn by 2006. Over the last number of years the cost of administration as a percentage of revenue collected has decreased by more than 50% and is now at its lowest level for 15 years.

During 2006:

• PAYE employments rose by 5% to 2.5m;

• Self assessment cases increased by 8% to 542,000;

• Company cases rose by 8% to 140,000; and

• VAT registrations rose to 273,000 again an 8% increase.

This growth in the Irish economy and Irish employment has had some particular impacts on Revenue and tax collection:

• Increasing volume of employees leads to more correspondence, personal callers, telephone calls, and online users;

• Increasing number and complexity of business taxpayers leads to higher volumes and increasing complexity of contacts;

• Changes to tax legislation both in Ireland and at EU level;

• Increasing criminality and the threat of terrorism drives new security requirements which particularly affect Customs; and

• Increasing demands from the EU for new regulations and compliance with, for example, the Single Administrative Document.

Information and Communications Technology (ICT) is an essential component of the Revenue operation and is critical to the achievement of Revenue’s goals. Revenue is at the forefront in exploiting technology to provide enhanced services to citizens and businesses, to deploy effective compliance programmes, and to maximise revenue collection. Its ICT systems provide the mechanisms to:

• Help reduce the number of customer contacts;

• Provide effective self-service and electronic options for those who need to contact Revenue; and

• Support Revenue’s business areas with an appropriate and evolving set of tax administration applications and productivity tools.


1

Revenue is one of the leading users of ICT in the Irish Public Service. Expenditure in 2006 was €78.2million14.

Due to the scale and complexity of the ICT projects and systems, and the requirement to have them delivered quickly, Revenue augments its in-house skilled ICT professional teams with external resources. These are obtained on foot of open EU tenders.

During 2006, Revenue spent c. €27m on external resources across eight major application areas. Almost all of this was with one prime contractor.

Description of Revenue’s ICT Infrastructure

Revenue takes a consolidated cross-taxhead approach to dealing with the wide range of taxes and duties for which it is responsible. This provides benefits in improved service to the taxpayer, better compliance and better yield.

The current Revenue ICT environment consists of three layers:

• The Integrated Taxation Services (ITS) core;

• The communication channels centred around the Revenue On-Line Service (ROS); and

• The messaging hub or Revenue Integration Services (RIS).

Revenue’s core applications for taxation, customs and excise reside within the ITS/ROS environments. The public interacts via ROS, while RIS provides the store and forward and message translation facilities between it and the core as well as gateways to the Government eBroker and the EU’s communication systems.

1.1.1 Scope of VFM Review The scope of this review is expenditure of approximately €27m incurred in the year 2006 on Information Technology External Resources. The review focuses on the management of this expenditure and the value for money obtained from it. This expenditure related to consultancy services provided by one prime contractor across the following eight application areas:

ITS Business Taxes

In this review “ITS Business Taxes” refers to all maintenance and development work carried out in 2006 on Revenue’s core Integrated Taxation Services (ITS) applications. These include Integrated Taxation Processing (ITP), a common transaction processing framework for all taxes and duties administered by Revenue, and the Common Registration System (CRS) which provides a consolidated customer register for all tax paying entities and their agents. Large-scale developments of applications within the ITS/CRS Framework (e.g. PAYE redevelopment, Case Management) are dealt with in separate sections of this review, but maintenance of existing systems lies within ITS Business Taxes.

PAYE

“PAYE” refers to all development work carried out in 2006 on the PAYE application. This included a major enhancement to provide PAYE employees with on-line facilities via the web and other channels. The work also encompassed the release of the various PAYE business functions required during the calendar year including the development of cyclical items such as bulk and rolling Automatic Carry Forward (ACF) systems and the implementation of budgetary and Finance Bill requirements. For the purposes of this 14From published figures (includes ICT staff costs)

Revenue VFM Review of Information Technology External Resources Expenditure 2

review, it also covers live support work (stabilisation programme) to address residual data issues from the old PAYE system to ensure that the new PAYE application successfully bedded-in to the live ITS environment.

Case Management

Revenue operates a number of case management systems to service various facets of tax compliance, including debt management, audit and prosecution. In this review “Case Management” refers to all maintenance and development activities carried out in 2006 on these systems including Active Intervention Management (AIM), Audit Case Management (ACM) and Prosecution Case Management (PCM). These systems have latterly been brought under the Integrated Case Management umbrella, which provides for single sign-on and a common view across cases being worked on.

Business Intelligence

“Business Intelligence” refers to all maintenance and development work carried out in 2006 on Revenue’s data warehouse and the related applications which comprise Revenue’s Integrated Business Intelligence (IBI) portal. It includes information management work for the Risk Evaluation and Profiling system (REAP), the sourcing and integration of external data sources from both the public and private sector, e.g. Dun & Bradstreet, and the automated matching of data received without a PPSN or similar reference number.

Technical Architecture/Standards

“Technical Architecture/Standards” refers to the maintenance and development of the Revenue Integration Services (RIS), the creation of a 24x7 high availability environment for Customs, the introduction of Information Technology Infrastructure Library (ITIL), the internationally recognised service management standard for Information Technology, and specific technical support around various products.

Customs Automated Entry Processing (AEP)

“AEP” refers to the development of the new Customs Automated Entry Processing application and its integration with the existing ITS environment. This application was developed to enable Revenue to comply with EU legislation on the harmonised and codified Single Administrative Document (SAD) along with the new pre-arrival and pre-departure summary declarations. It replaced the existing AEP system and allows for direct interaction by traders via inbound and outbound channels developed in the Revenue On-Line Service (ROS).

Revenue On-Line Services (ROS)

“ROS” refers to the maintenance and development work carried out within Revenue On-Line Service. ROS is an internet facility, which provides Revenue customers with a quick and secure facility to file tax returns, pay tax liabilities, access their tax details online on a 24-hour basis and to provide required details of imports to and exports from Ireland. ROS is the primary online channel for customer interaction with the ITS applications; others include Interactive Voice Response (IVR), Short Messaging Service (SMS) and secure File Transfer Protocol (FTP).

Other Items (MIF, TRS, CCP and miscellaneous)

“Other Items” refers to any expenditure within ICT that is not included in the above seven categories. This includes Management Information Framework (MIF), a framework for financial management and performance measurement, Tax Relief at Source (TRS) system for calculating relief in respect of medical insurance premiums and mortgage interest relief and the Customer Contacts Project (CCP), a programme initiated to improve customer service capabilities through technology solutions, in particular for the PAYE taxpayer.


1.1.2 Terms of Reference The terms of reference for this review, which are based on the template included in the Department of Finance VFM framework, were as follows:

• Identify the objectives of the IT External Resources expenditure programme;

• Examine the current validity of the objectives of the IT External Resources expenditure programme and their compatibility with the overall IT programme strategies of Revenue;

• Define the outputs associated with the activities of the programme and identify the level and trend of those outputs;

• Examine the extent to which the programme’s objectives have been achieved, and comment on the effectiveness with which they have been achieved;

• Identify the level and trend of costs and staffing resources associated with the programme and comment on the efficiency with which they have achieved their objectives;

• Evaluate the degree to which the objectives warrant expenditure on a current and ongoing basis and examine the scope for alternative approaches to achieving these objectives on a more efficient and/or more effective basis; and

• Specify potential performance indicators that might be used to monitor and evaluate the efficiency and effectiveness of future IT External Resources expenditure.

1.2 Objectives of External Resources Expenditure The objective of the external resources expenditure in 2006 was to ensure prompt delivery of Revenue’s ICT programme by utilising skills, experience and resources which, because of capacity and capability constraints, were not available internally. Detailed objectives for Revenue, and specifically for ICT expenditure, are set out in Revenue’s Statement of Strategy and the ICT Strategy 2006-2008. The following key priorities are identified:

• Achieve collection targets;

• Provide a more risk based approach to non-compliance;

• Increase prosecutions and investigations;

• Progress legacy investigations;

• Provide quality customer service;

• Advance the eBusiness agenda;

• Improve alignment of resources with risk; and

• Improve organisation effectiveness.

Information Technology is central to the support of these objectives, and Revenue has invested significantly in its IT systems in recent years.

1.3 Current Validity of Objectives of External Resources Expenditure and Compatibility with ICT Programme Strategies

Given Revenue’s stated business and ICT strategies, the objectives of the external resources expenditure remain valid and highly compatible with the IT programme.

• Revenue is part way through a multi-year ICT strategy (2006-2008);

• It has a major programme of work to deliver under this strategy;


• Revenue intends to continue to use external resources to augment its internal team. This is normal for any public or private sector organisation undergoing similar levels of investment; and

• It should be noted that all comparator organisations reviewed as part of this evaluation use external resources to varying degrees. The level of external resource used depends on factors such as the amount of work being undertaken and the availability of internal resources and skills.

1.4 Outcomes Associated with External Resources Expenditure

Significant progress was made in 2006 on the applications reviewed as set out in Section 4.

The following is a summary of the more important outputs:

ITS Business Taxes[Awaiting details of outcomes from PD]

• ROS customers now have their refund processing prioritised over non-ROS customers thereby encouraging the use of this more efficient channel;

• Automatic comparisons are carried out between the annual and monthly Relevant Contract Tax returns (RCT35 and RCT30 respectively);

• Surcharges are raised on Capital Gains Tax (CGT) returns that are filed late;

• Corporation Tax (CT) refunds are made directly to bank accounts - cheques are no longer being used for this purpose; and

• Successful implementation of Annual Budget and Finance Bill changes.

PAYE

• PAYE customers may access and modify their own data using on-line services reducing the number of queries received;

• The old PAYE system could potentially allow excess credits to be recorded. While these situations were amenable to correction by examination of the individual cases, given the volume of PAYE taxpayers, it was also possible for them to go unidentified. The new system eliminated this situation; and

• Successful implementation of Annual Budget and Finance Bill changes.

Case Management

• Enhanced solutions have provided increased capacity for case workers to deal with customers from a more integrated or “whole case” perspective.


• Developments during 2006 have provided enhanced delivery of information to the business via the Integrated Business Intelligence portal. This has led to improved targeting of customers to increase compliance and detect evasion.

Technical Architecture and Standards

• Development of the Revenue Integration Services in 2006 resulted in a technically enhanced (fully scalable, load balancing, failover capability) system. RIS development work was also required to support the new PAYE on-line solution. Integration work for the AEP project started in late 2006; and


• New service management processes, based on ITIL, were introduced.

Revenue On-Line Services

• The ROS system was enhanced to the point that 70% of Income Tax customers filed their returns electronically, saving considerable data capture effort. This was a significant increase on previous years and was facilitated by enhancements carried out to ROS hardware, software and communication services; and

• Introduction of on-line access to PAYE services provided customers with self-service capability and has resulted in cost efficiencies for staffing, printing and postage.

Customs AEP

• The new Customs AEP solution has delivered the functional changes required by new EU legislation together with improved customer service. It has also contributed to Revenue’s ICT strategic objective of reducing its dependency on legacy mainframe technology.

Other Items[Awaiting details of outcomes from PD]

• The Customer Contacts Project has streamlined the phone service and, through the use of IVR and SMS technologies Revenue has positioned itself well for continuous improvement of customer services including more self-service options.

1.5 Extent to which the programmes’ objectives have been achieved, and effectiveness with which they have been achieved

The main objectives set out in 2006 were achieved as evidenced by the successful completion of the majority of projects and sub-projects planned at the outset of the year. Some planned smaller sub-projects were not completed due to changing priorities or circumstances in the business – this is not unusual in an organisation with a complex portfolio of projects to complete.

Based on our interviews with key internal stakeholders and reviews of the available project documentation, the external resources expenditure was effective in achieving the objectives of the various programmes. This is evidenced by:

• All key planned systems are live and operating successfully;

• They are meeting legislative requirements on a daily basis;

• They are providing enhanced services to Revenue personnel (based on user interviews and surveys); and

• They are providing additional functionality and service to the general public and business users.

The effectiveness with which the objectives of the programme has been achieved have been assessed on the basis of the following factors:

• Business Case and Benefits Realisation;

• Procurement of External Resources; and

• Quality and Risk Management.

Business Case: There were strong overall business cases for the external resources expenditure examined in this report (see Section 6.2.1). However, these were not documented formally in the sense that there was no single, standardised and comprehensive format that fully addressed all elements of a business case. However, the


objectives and costs for each project were well understood by senior management and were documented in various project documentation. While business cases for projects that are driven by legislative and maintenance requirements can be difficult to develop, Revenue is addressing this with a new comprehensive business case process that was piloted in 2006. The new business case process will be used for all investments over €250,000. A simplified business case process, commensurate with the scale and costs of smaller projects, will be developed by the Programme Management Office (PMO) in 2008.

Recommendation 1 – Business Case Process

We recommend the full implementation of the new formal business case process. Any future material changes to existing programmes should be re-run through the business case process. The new PMO should support and monitor this process.

Benefits Realisation: The ROS project team monitors certain benefits in a formal way and has good statistics on the benefits being achieved. Revenue has commenced a benefits realisation process in respect of a small project which was completed in 2007 and plans to extend this process to all other major ICT projects in 2008.

Recommendation 2 – Benefits Realisation

We recommend the full implementation of a formal benefits realisation process to track and monitor actual achievement of benefits. Responsibility for benefits realisation should remain with business line management. The planned PMO should be tasked with assisting line management in tracking, monitoring and achieving benefits.

Procurement of External Resources: During the period under review, external resources were procured under three existing separate contracts in respect of ITS, ROS and Customs AEP. Following competitive EU tendering processes on each occasion, all three contracts were awarded to Accenture as the prime contractor. Other vendors including Groupe Bull (France), WMData (Denmark) and Luminary (UK) provided significant deliverables in these areas. The ITS and ROS contracts are based on a time and material model while the Customs AEP is a fixed price contract. As a result of pressure to meet a very significant development schedule involving tight project deadlines the ROS contract has been renewed on an annual basis without re-tendering since 2000.

Revenue has recognised that it has become heavily dependent on a single provider of external resources over the past several years and has identified the implementation of a multi-sourcing strategy as an area of significant change in its ICT Strategy 2006-2008. A series of fresh market approaches are planned for 2007/8, with the first tender already completed. This resulted in the appointment of a new consortium for technical, QA/testing support and various certification programmes.

Recommendation 3 – Procurement of External Resources

• We recommend that Revenue continue to develop and implement its multi-sourcing strategy. This should include a comprehensive sourcing strategy for external ICT resources which takes account of the integrated nature of the Revenue systems. Revenue should focus on developing a small number of strategic suppliers who have the capability and scale to support the core integrated systems. It is recognised that for certain projects requiring deep technical skills, there is a limited number of suppliers with the required skills in the market;

• Expenditure on external resources should be analysed and categorised based on service characteristics (e.g. New Projects, Maintenance, Infrastructural, Quality Assurance). Where appropriate, consideration should be given to the appointment of multiple suppliers to each category to facilitate future competition and drive further cost savings/value for money;


• The completion of the major integration programmes should give Revenue the opportunity to consider smaller work lots than heretofore for upcoming developments such as Revenue Case Management. Where possible, work lots should be manageable pieces of tightly related activities that can be associated with identifiable deliverables;

• Contracts should be re-tendered and renewed regularly, no less frequently than every three to four years; and

• More extensive use should be made of Fixed Price lots of work in particular for New Projects and Maintenance Work.

Quality and Risk Management: Quality and risk management activities were carried out on all projects and internal stakeholders feel that quality was good, as evidenced by the successful delivery of a large number of projects. These are all now operating in a live environment without any major quality issues.

The highly integrated nature of Revenue’s major applications requires high quality structured testing and quality assurance mechanisms. This requirement is reinforced by Revenue’s need to convert data accumulated over decades as was the case in the PAYE redevelopment project. This led to a need for a stabilisation programme, which was put in place in March 2006, to address the issue of data quality in the PAYE redevelopment.

As part of ongoing reviews of Revenue capabilities by the IT Executive, and taking into account a post project review of the complex PAYE redesign, an initiative to put in place a ‘professional and independent testing branch’ was suggested as part of the ICT Strategy 2006-2008. This was successfully piloted as part of the AEP Project. It will be developed further for upcoming projects.

Recommendation 4 – Quality and Risk Management

We recommend the rapid roll-out of the new Quality Assurance and Testing function, which has already been piloted. This new function should focus on making QA more formalised and establish repeatable methods, to include data testing strategies for major data conversion programmes. Revenue should develop QA and Testing skills in enough resources to ensure that this function can be staffed appropriately and continuously. This function should continue to be supported in the interim by the use of external, professional resources to ensure capability and momentum is maintained.

1.6 Level and trend of costs and staffing resources associated with the programme and efficiency with which they have achieved their objectives

The total costs of the external resources expenditure in 2006 was approximately €27.1m. Expenditure on external resources for the years 2003 through to 2007 (projected) is provided below.

2003

(€)

2004

(€)

2005

(€)

2006

(€)

200725

(€)

12,080,000 17,870,000 22,430,000 27,076,000 26,000,000

Table 1.1: ICT Expenditure on External Resources

The trend of costs was upwards to 2006 with a projected small decrease in 2007. The rationale for this upward trend in external resource expenditure was as follows:

25Budgeted Figures


• A need to modernise and integrate Revenue’s ICT systems and “catch up” with a deficiency in expenditure in prior years; and

• A substantial increase in the number of customers, complexity of customer service requirements, volumes of tax collected (as evidenced by the growth in revenue collection), and complexity driven by legislative changes.

We benchmarked expenditure in other Government revenue collection agencies and a private sector comparator (Bank of Ireland). Revenue’s expenditure on external resources in 2006 is within expected norms based on the comparator organisations used.

The efficiency with which the objectives of the programme have been achieved has been assessed on the basis of the following factors:

• Internal resources team and skills;

• Governance; and

• Project, programme and portfolio management and Programme Management Office.

Internal resources team and skills: In order to make the most efficient use of external resources, and ensure value for money is being achieved, it is first necessary to ensure that Revenue’s internal ICT team has the optimal mix of skills and resources. There is scope to build up internal skills capacity and replace external resources expenditure in certain areas with internal resources. Revenue, like most public sector bodies, is experiencing skills shortages in a number of areas, including architecture and technical design, functional design and project management skills. Revenue has commenced its scheduled programme of recruitment of additional technical skills to help reduce the need for external resources.

As Revenue moves towards a multi-vendor environment, and as it invests in additional in-house technical skills, it will become even more important to have suitable project management and business analysis skills in the team.

Recommendation 5 – Internal Resources Team and Skills

Revenue should focus on increasing its Project and Programme Management capacity, by training more resources in skills including business case development, business analysis, benefits realisation, change management, quality assurance, Value for Money reviews, strategy development, and application and technical architecture. This initiative should also supplement existing procurement and contract management skills to support its new multi-sourcing strategy.

Revenue should also continue to develop its IT Human Resources strategy focussing on training, career development and succession planning.

Governance: Revenue had strong governance structures and procedures in place during 2006 and this was a critical success factor in the delivery of projects.

In a review of governance carried out during 2005, Revenue identified a number of areas where further improvements could be made:

• Ongoing review of the size of Project Boards;

• Continuous focus on accountability of Project Board members for decisions; and

• Further improvements and standardisation of documentation – business cases, project status updates etc.

Significant progress on the implementation of these improvements was achieved in 2006 and is progressing in 2007.


Recommendation 6 – Governance

• We recommend that Revenue continue to make the improvements identified in the Governance review carried out in 2005;

• Project board members should be provided with appropriate training to support the fulfillment of their responsibilities; and

• Plans to standardise monitoring and reporting across all projects should be rolled out as quickly as possible.

Project Management: We found during our evaluation that good project management was in place, as evidenced by the successful delivery of most projects. Documentation was largely good though there was some lack of standardisation. In the case of the PAYE project, a number of issues relating to the timely allocation of business and testing resources and sign-off on business requirements arose in 2004 and 2005. The lessons learnt from this project and experience from other projects are being addressed through more rigorous project management controls. Revenue is in the process of further standardising its implementation methodology using RDM (Revenue Development Method) and elements of PRINCE2. Project reporting is being improved in 2007.

Project estimating was generally found to be good though it was found that it could be improved in certain areas. For example, the development of the Revenue Integration Service (component of the Technical Architecture and Standards project), which was a cutting-edge technological solution, was more complex than originally estimated. This involved a re-estimation of the development effort and the allocation of additional funding in the mid-year review by ITEX. For an overview of estimated versus actual expenditure for all projects please refer to Section 4.12.

Recommendation 7 – Project Management

• Revenue should continue the rollout of a standard development methodology such as RDM (or similar);

• Revenue should continue the move towards greater use of PRINCE2, in particular for initiation, timely resourcing, controlling and project closure;

• A history of estimates vs. actuals of agreed prices and work delivered should be developed and used to develop internal skills in this area. This will be essential as the environment moves towards greater use of outsourcing in certain development areas; and

• To ensure that a consolidated view of all expenditure associated with each programme is available, project accounting policies, processes and tools should be examined and considered for future use.

Portfolio Management and PMO: During the period of this evaluation, Revenue delivered a significant programme of work. Each of these programmes consisted of several sub-projects. While some projects were standalone, others shared a significant amount of interdependency, from a technical and business perspective. For example, the implementation of AEP required changes to the main ITS/CRS platform, ROS for internet access, significant architectural changes around the RIS routing and message translation functions and integration of complex commercial off-the-shelf (eBiscus, Eskort) elements. Resources were often swapped between the various projects.

As Revenue goes forward, the integrated nature of the computer systems and business processes means that future projects will require increasing coordination. Given the number and complexity of projects underway in Revenue, a more formal approach to Portfolio management would be useful. This would provide an overview of all projects and programmes being delivered, facilitate an assessment of their relative strategic relevance and rationale and support the active planning and targeting of resources to maximise the benefit to the organisation.


Revenue decided in late 2006 to introduce a Programme Management Office (PMO) to serve as a reporting conduit to MAC/ITEX from a programme co-ordination perspective, and to provide an independent voice to project boards on project management and the quality of their plans and products. It will also act as a repository for standardised tools and processes. It was considered that at this stage of its evolution, the PMO should be part of the ICT function. We believe that Revenue will need to fully resource and actively use the PMO roles to effectively carry out the recommendations in this review.

Recommendation 8 – Programme Management Office

• We recommend that Revenue roll out the proposed PMO as quickly as possible given the major ICT programmes underway;

• Consideration should be given to including business case development and benefits realisation support in the functions of the PMO. Portfolio management techniques should also be considered for inclusion as soon as this is practical;

• As Revenue increasingly moves to multiple vendors for external resources – support for procurement and vendor management could also be considered for inclusion in the PMO; and

• Portfolio management could provide an important tool to help senior management gain visibility of value issues across the entire set of projects and programmes.

1.7 The degree to which the objectives warrant expenditure on a current and ongoing basis and scope for alternative approaches to achieving these objectives on a more efficient and/or more effective basis

The opinion of the review team is that the objectives continue to warrant expenditure on a current and on-going basis:

• The ICT systems already implemented are providing considerable efficiencies and services to internal and external customers. All ICT systems require ongoing maintenance to keep them up to date and compliant with current legislation and developments in technology; and

• There are several planned systems (as set out in the multi-year ICT strategy) yet to be delivered. These warrant continued external resources expenditure subject to detailed business case evaluation and continued environmental scans, e.g. slower economy, EU requirements.

Revenue’s ICT programme is complex, as set out in Section 4. There are no instant or simple alternative approaches to the strategies being adopted by Revenue in achieving their business and ICT objectives. Instead one needs to think of value creation as a set of continuous processes that over time yield improvements to value for money. A number of the best practice techniques and tools discussed in this document have already been implemented by Revenue while others are in the process of being implemented. Based on an assessment of what was most appropriate for Revenue, Revenue has decided to implement only the most relevant and valuable components of a number of other suggested techniques. This is to be expected of an organisation that has considerable experience in delivering major ICT programmes.

As discussed in the report, there is scope to build up internal skills and replace external resources expenditure in certain areas. However, care must be taken to build up the right kind of skills. In some ways project and business analysis skills are even more important than technical skills as it can be argued that lower level technical skills are readily accessible from outside.


A key element of Revenue’s strategy in relation to the development of internal ICT capacity is to grow back the architecture and technical designer layer which was eroded over the last decade through promotion and loss of experienced staff and compounded by difficulties in the recruitment and retention of IT specialists across the public service. Revenue has started to address this issue largely through the recruitment of administrative officers and graduates to ensure that it retains control of its ICT strategy and architecture. The ongoing implementation of Revenue’s IT HR policy focussing on training, career development and succession planning for this core layer of in-house specialists, will ensure that Revenue retains control of its ICT portfolio.

Moving to a multi-vendor environment introduces increased competition for work and is the only way to continually ensure that the best value for money is being achieved for external resources expenditure. The challenge is to successfully move to a multi-vendor environment without taking on undue risks to quality or project delivery.

There are many vendors that specialise in different aspects of supporting a modern ICT environment. These range from individual contractors to global Systems Integrators and from advisory firms to specialist and niche suppliers of services. Though Revenue’s strategy of building up internal capacity in mission-critical areas is fully accepted, Revenue might find it cost effective to outsource more of certain types of work particularly in non-core areas.

Recommendation 9 – Utilisation of External Resources

• Revenues mission-critical objectives warrant the levels of expenditure on external resources on a current and continuing basis;

• Revenue should continue the strategy of growing back its in-house skills particularly in the architecture and technical design layer and must ensure it retains control of its ICT strategy and architecture. Revenue should also prioritise the development of management and business analysis skills (business analysis/business case, benefits realisation, change management, procurement, vendor management, value for money and QA); and

• As part of its new multi-sourcing approach, Revenue should use different types of external resource models and consider the range of options available from individual contractors to global system integrators. It should not restrict itself to two or three suppliers that are similar in scale to the existing major supplier. It is however, recognised that there are limited market possibilities for some deep technical skills.

1.8 Potential performance indicators that might be used to monitor and evaluate the efficiency and effectiveness of future IT External Resources expenditure

To deliver value, expenditure must be linked to outcomes and progress must be measured against business objectives.

This review found that Revenue carried out regular reviews of the efficiency and effectiveness of this expenditure in terms of contract performance management, project performance management and, in the case of the ROS and AEP contracts, operational metrics. There is scope, however, for a more formal performance measurement framework to be put in place.


Recommendation 10 – Performance Management Framework

We recommend that Revenue develop a performance management framework for all its ICT projects which can be used as the basis for aligning metrics, key performance indicators, objectives and strategy. Revenue should consider including specific performance indicators for Contract, Project, and Operational performance. A programme-wide approach should be considered, and coordinated through the planned Programme Management Office. This would provide a framework for considering KPIs across all programmes and managing dependencies and overlaps. It would also facilitate integration with the business case and benefits realisation management processes. These should feed into the existing MIF framework.

Metrics provide basic information on the number of items and actions. These can be interpreted to provide performance indicators for the business. A number of Key Performance Indicators (KPIs) are suggested for the evaluation of future IT External Resources expenditure relating to contract performance management, project performance measurement and operational performance.

Contract Performance

Examples of indicators that could be used to manage the performance of the contracts for external resources include the following:

• Earned Value (for external resources expenditure);

• Quality (e.g. quantity and severity of software defects);

• Value added services (e.g. skills transfer completed against target); and

• Cost (estimates vs. actuals).

Project Management Performance

In addition to the existing measures for managing project performance (cost and time), the following may provide a more quantified assessment;

• Skills development (e.g. project management or technical skills); and

• Quality (number of software defects against a pre-defined target).

Operational Performance

The objectives for each project, and the alignment of these objectives with Revenue’s overall strategy were documented as part of this review. This can now be used as the foundation for setting baselines and targets, which can in turn be used to assess performance in the future.

Based on the objectives documented for this report the following sample KPIs could be considered:

• Processing time saved (for various processes);

• Increased revenue collected;

• Reduced costs of document production and distribution; and

• Service levels being met.


Note that there may be significant overlap in the benefits delivered by different project investments. It may be useful to map the end-to-end processes to identify which benefits are being realised where, and to baseline and manage performance accordingly.

KPIs are further analysed and explained in Section 6.

1.9 Putting value at the centre of all ICT investments

Most organisations recognise the creation of value as a key governing objective. It is important to align strategies with projects and measures. Clear ownership of value creation, and the processes to support it, are important considerations for organisations striving to maximise value from investments.

The key driver for many Revenue programmes/projects will continue to be either Government or EU legislative requirements that are not readily quantifiable in economic terms. While investments in such programmes/projects are mandatory, Revenue should, nevertheless, place value for money considerations at the centre of the implementation of these programmes/projects. Identification, quantification and measurement of value should form a key part of the business case, programme/project management, implementation and post-implementation review. This process should be supported by the Programme Management Office.

Each of the detailed recommendations in this report concerning governance, project management, business case, benefits realisation, quality assurance etc. can contribute to the achievement of value realisation.

Recommendation 11 – Overall Value for Money

Subject to the constraints in the selection of projects arising from the mandatory nature of Government or EU legislative requirements, the Revenue governance structures, particularly ITEX and Project Boards, should ensure that obtaining value is a key, measurable deliverable from programmes/projects.

Implementation of many of the other recommendations in this report will support this objective.


Section 2 Background to the Review and Terms of Reference

This review of Revenue’s expenditure on Information Technology External Resources3 for 2006 was carried out under the terms of the Government’s Value for Money and Policy Review programme (VFM). The VFM programme is a process of evaluation carried out by each Government Department and Office as part of their annual business planning cycle. The objective of the VFM programme is to analyse, in a systematic manner, what is being achieved by Government spending and to provide a basis on which more informed decisions can be made. As Revenue has no programme expenditure per se, its commitment to the VFM process consists of an examination of administrative and operational expenditure. Reviews are prepared in accordance with Expenditure Reviews – Framework and Guidelines issued by the Department of Finance (see Appendix 1). The VFM framework is overseen by the Central Steering Committee (CSC) on Programme Evaluation, chaired by the Secretary General, Department of Finance, and facilitated by the VFM Secretariat in that Department.

2.1 Scope of this VFM Review The scope of this review is expenditure of approximately €27m incurred in the year 2006 on Information Technology External Resources. The review focuses on the management of this expenditure and the value for money obtained from it. This expenditure related to consultancy services provided by one prime contractor across the following application areas:

• ITS Business Taxes;

• PAYE;

• Case Management;

• Business Intelligence;

• Technical Architecture/Standards;

• Customs Automated Entry Processing (AEP);

• Revenue On-Line Systems (ROS); and

• Other Items (including all non-ITS projects – MIF, TRS, CCP).

The decision to select Revenue’s IT External Resources expenditure as the topic for this VFM review was based on:

• The materiality of the expenditure which constitutes about 20% of Revenue’s non-pay total gross vote for 2006;

• The opportunity to further inform Revenue’s approach to the use of external resources; and

• The opportunity to identify areas where enhanced value for money can be attained from future contracts for external resources.

2.2 Terms of Reference The terms of reference for this review, which are largely based on the template included in the VFM framework, were approved by both the Revenue Board and the Department of Finance, and are as follows:

• Identify the objectives of the IT External Resources expenditure programme;

3 Formerly designated as Information Technology Consultancy Expenditure


• Examine the current validity of the objectives of the IT External Resources expenditure programme and their compatibility with the overall IT programme strategies of Revenue;

• Define the outputs associated with the activities of the programme and identify the level and trend of those outputs;

• Examine the extent to which the programme’s objectives have been achieved, and comment on the effectiveness with which they have been achieved;

• Identify the level and trend of costs and staffing resources associated with the programme and comment on the efficiency with which they have achieved their objectives;

• Evaluate the degree to which the objectives warrant expenditure on a current and ongoing basis and examine the scope for alternative approaches to achieving these objectives on a more efficient and/or more effective basis; and

• Specify potential performance indicators that might be used to monitor and evaluate the efficiency and effectiveness of future IT External Resources expenditure.

2.3 Organisation of the Review A Steering Committee consisting of senior staff from various Revenue Divisions and a representative from the Department of Finance was established to oversee the review. The Committee met on a monthly basis between March and November 2007. The Committee oversaw the production of the report in accordance with the defined terms of reference. A review team of Revenue officials was set up to support the Steering Committee.

Following a tendering process, Deloitte Consulting was appointed to assist the team in carrying out the Value for Money review.

C. Moore and Associates was appointed, again after a tendering process, as an independent external evaluation expert to:

• Provide an assessment of the proposed methodology and project plan for the review;

• Provide an assessment of the preliminary draft VFM report; and

• Quality assess the final draft report.

2.4 Review Methodology The VFM review involved a study of objectives, inputs, activities, outputs, and outcomes to reach conclusions on the evaluation criteria (rationale, efficiency, effectiveness, impact and continued relevance). The evaluation criteria are reflected in the evaluation questions agreed in the Terms of Reference. The general approach is based on the programme logic model as described in the VFM Guidelines Framework. The rationale for this approach is that if the links between inputs, activities, outputs, outcomes, results, and impacts can be confirmed and achievement measured by reference to agreed performance indicators for each link in the chain, then there is a basis for reaching conclusions on the performance delivered by the programme. Where it is found that there are weaknesses in some linkages within the programme logic, then this has a basic effect on the strength of the conclusions that can be reached. For example, if the programme logic links between outputs and outcomes are weak then this affects the conclusions that may be reached on effectiveness and impact.

The evaluation criteria and how they were assessed as part of this review are described below:


Rationale

Rationale refers to evaluation questions concerned with identifying the programme objectives and examining their validity. As part of this VFM evaluation, we carried out an assessment of the linkages between objectives, inputs, outputs and outcomes. The objectives were compared with the objectives set out in the Statement of Strategy. We conducted interviews with stakeholders to gain an appreciation of the linkages. An appraisal was made of the appropriateness of the indicators of achievement for inputs, activities, outputs and outcomes of the programmes.

Efficiency

Efficiency concerns the evaluation questions that ask for identification and analysis of trends in inputs, activities and outputs. On this evaluation particular attention was paid to the quality and timeliness of outputs and planning, and control and cost of the inputs. The trends of the relevant expenditure were mapped and appropriate benchmarks from other organisations were used for comparative study.

Effectiveness

Effectiveness refers to the extent to which programme objectives are achieved. The establishment and maintenance of objectives are covered under the rationale and continued relevance criteria. Effectiveness focuses on the results of the outputs. In this review the results of outputs, their measurement and the appropriateness of the outputs and the result indicators used, were evaluated. Through review and interviews, a gap analysis was performed and strengths and weaknesses identified and highlighted.

Impact

The impact evaluation questions focus on wider socio-economic effects (including the medium to long term impacts on target beneficiaries), the contribution of the programme to overall policy implementation and the influence of other policy frameworks. As impact is concerned with taking the longer-term view, for some of the programmes e.g. AEP, it was not possible to draw conclusions as the impacts have yet to be seen.

Continued Relevance

Continued Relevance includes the evaluation questions that cover the justification for continued allocation of public money to a programme. To measure this criterion the environment/context in which the programme operates was assessed, the achievement of objectives was reviewed and target indicators were challenged.

2.5 Our Approach to the Review The approach for the review involved the following activities:

• The review team carried out a substantial amount of desktop analysis and research, which included an extensive review of existing project documentation relating to the external resources expenditure. The material included, but was not limited to:

• eGovernment Agenda;

• Revenue’s current Statement of Strategy;

• Revenue’s 2006 Annual Report;

• Revenue’s ICT Strategy 2006-2008;

• Business case material (where available);

• Request for Tender (RFT) and RFT assessment documents;


• Supplier proposals;

• Supplier Contracts;

• Project initiation documentation (where available);

• Scoping and planning documentation;

• Project plans;

• Status reports for projects;

• Reconciliation documentation; and

• PAYE project review report.

• Stakeholder interviews and workshops, including:

• The Chairman of the Revenue Commissioners;

• The Chairman of ITEX;

• The Director ICT;

• The Collector-General;

• Chairmen of the Project Boards;

• End users, via a web-based user survey;

• Representative bodies by way of a review of the minutes of meetings of the Customs Consultative Committee and the Taxation Administration Liaison Committee;

• CMOD; and

• Accenture Partners.

• External research including:

• Desk review of prior research into industry benchmarks and comparators; (using Deloitte research and material from ICT research organisations );

• Interview with a private sector comparator;

• Interview with a number of other revenue authorities;

• Cost benefit analysis and cost effectiveness analysis;

• Recommending potential future performance indicators; and

• Formulating judgements on the evaluation criteria.

2.6 Methodologies used As this review focused on ICT External Resources expenditure, a number of industry standard and Deloitte proprietary methodologies were used in addition to the VFM Guidance Framework.

The Programme Logic Model was used for overall evaluation of the programmes. This model provides a framework for reviewing programme performance in terms of objectives, inputs, activities, outputs and outcomes. In addition, cross-programme evaluation was carried out using the following methods and guidelines:

• COBIT was used to evaluate governance;

• EU and Irish procurement guidelines were used to evaluate contracts and procurement;


• PRINCE2 and PMBOK were used to evaluate project and programme management activities; and

• PMBOK was used to evaluate quality and risk management.

The Deloitte CIO Framework was used across all areas to complement the industry standard methods, where a more IT specific view was required.


Section 3 Introduction and Overview

3.1 Economics and Demographics Ireland has an estimated population of 4.23 million according to Census 2006, which has increased by 8.1% in four years4. The Central Statistics Office (CSO) predicts that the population will increase to 4.8 million by 20165.

Ireland’s economy has been growing rapidly. It outperformed all other European economies in the 1990s with a growth rate that was three times the European average. A recent OECD publication ranked Ireland fourth for GDP per capita at Purchasing Power Parity (PPP) in 2005 among 55 countries. The strong performance of the economy has resulted in employment growth, with for example, 88,000 net jobs in 2006 or 4.5 per cent growth in employment. During 2006 the average rate of unemployment was around 4.5%. This unprecedented growth in the Irish economy and in Irish employment has created significant challenges for all aspects of national and local governments.

3.2 The Revenue Commissioners Revenue is the Irish Tax and Customs Administration. It is responsible for the administration, assessment and collection of taxes and duties and the implementation of customs laws. Its mission is to serve the community by fairly and efficiently collecting taxes and duties and implementing import and export controls. It also performs agency work on behalf of other Government Departments. It employs approximately 6,500 staff located in 130 offices throughout the country.

Revenue’s Statement of Strategy 2005-2007 identifies the following three high-level goals:

• Ensure everyone complies with their tax and customs responsibilities;

• Be a capable, flexible, results-oriented organisation; and

• Play our part nationally and internationally.

The total revenue collected in 2006 was €62.3 billion; this is illustrated in the table below:6

4 CSO Census of Population 2006 5 CSO Regional Population Projections, 2006-2021 6 Source: Annual Report 2006, page 9


Table 3.1: Total Revenue Collected (Gross Receipts)

Volumes of Business

As can be seen from the table below7 there are a number of areas that show a large increase in the volumes of business transacted by Revenue.

7 Revenue Annual Report 2006 pages 14-15


Table 3.2: Revenue Volumes of Business 2006

Gross Receipts show a substantial year on year increase which is reflected by the volume of business.

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%Total Gross Receipts

Cost of adminintration as a % of Gross Receipts

Figure 3.1: Gross Receipts and Cost of Administration as a % of Gross Receipts


From the above data the following can be noted:

During 2006:

• PAYE employments rose by 5% to 2.5m;

• Self assessment cases increased by 8% to 542,000;

• Companies rose by 8% to 140,000; and

• VAT registrations rose to 273,000, again an 8% increase.

The cost of administration as a percentage of revenue has decreased by more than 50% over the past number of years and now is at its lowest level for 15 years.

The growth in the Irish economy and Irish employment has had some particular impacts on Revenue and tax collection:

• Increasing volume of employees leads to more correspondence, personal callers, telephone calls, and online users;

• Increasing number and complexity of business taxpayers leads to higher volumes and increasing complexity of contacts;

• Changes to tax legislation both in Ireland and at EU level need to be catered for;

• Increasing criminality and the threat of terrorism drives new security requirements which particularly affect Customs; and

• Increasing demands from the EU for new regulations and compliance with for example the Single Administrative Document.

3.3 Characteristics of Public Sector ICT Rapid economic growth is creating significant challenges for Public Sector service delivery all over the world. This in turn is placing significant pressure on Public Sector ICT systems. In addition to the increasing volume of business transacted by the public sector, there are several other drivers of change:

• Globalisation;

• Rising demands from citizens for better service and access to services through multiple channels, including online;

• Rising and more stringent security requirements – need to securely establish the identity of all entities and people dealt with (c.f. Money Laundering requirements);

• Rising need for transparency in all aspects of Public Service delivery (c.f. Freedom of Information Act); and

• The requirement to enable individuals and businesses to more easily and cost effectively comply with regulatory requirements.

In response to the challenges, a growing number of governments around the world are finding creative and innovative ways to better serve the public. Bureaucracy is gradually being eroded and traditional practices, structures and systems are being modernised. Governments are taking a more partnership approach with commercial businesses and citizens. This is evidenced in Ireland, for example, by an increasing move towards tax self-assessment. In the case of Customs and Excise, the recently introduced AEP system puts far greater onus on Commercial entities to enter their correct information themselves and get it right first time.


Another aspect of these rising links to commercial entities is recognition by Public bodies that they cannot deliver all aspects of improved services themselves. This is leading to an increasing use of external service providers, subcontractors and outsourcing partners.

At a time of such dynamic change, the issues of government performance, value for money and accountability for the use of public resources are constantly to the fore. Government policy and performance is increasingly being measured by results and outcomes – not by how much money gets thrown at a problem.

But performance management in the public sector is frequently made complex by a lack of formal market signals and feedback available to the private sector (e.g. market share vs. competitors) as well as a lack of well-defined performance targets for many aspects of service delivery.

ICT is central to achieving improved performance in the Public Sector. The Public Sector is primarily a services provider and ICT can be a key way of providing efficient services to the public at an acceptable cost.

ICT in the Public Sector can have multiple stakeholder demands:

From customers:

• Timely and efficient service;

• Multiple channels – personal, post, telephone and internet; and

• Equity and dignity – including dealing with non-national customers.

From Government and Ministers:

• Statutory obligations;

• Avoiding embarrassments;

• Demonstrable achievements; and

• Electoral commitments.

From senior management:

• Policy development and implementation of Government policy; and

• Decision making based on timely and accurate data.

From employees:

• Workload and morale;

• Satisfaction and values; and

• Efficiency – having the tools to maximise job outputs.

Fiduciary:

• Doing more with less;

• Budget management;

• Accountability/governance;


• Audit/controls; and

• Public procurement.

Effective government requires partnerships across the public service. In the case of Revenue, there are linkages to many Government Departments and Agencies including Finance, Community and Family Affairs, Agriculture and Food, Environment, Heritage and Local Government, the Central Statistics Office and the Public Service Broker (REACH).

Further challenges facing Public Sector ICT Include:

• A need to modernise sometimes ageing ICT systems;

• An ageing ICT staff which coupled with new technologies requires an investment in new staff and re-skilling existing staff; and

• Difficulty in retaining skilled ICT professionals and in the recruitment of such staff.

3.4 Characteristics of Revenue ICT Information and Communications Technology (ICT) is an essential component of the Revenue operation and is critical to the achievement of Revenue’s goals. Revenue is at the forefront in exploiting technology to provide enhanced services to citizens and businesses, to deploy effective compliance programmes, and to maximise revenue collection. Over almost 40 years, Revenue has successfully delivered many major computer systems, including in recent years the multi-award winning Revenue On-line Service. In addition, Revenue is one of the very few countries to have successfully implemented a fully integrated taxation and customs system.

Revenue’s ICT systems provide the mechanisms to:

• Assess liability for millions of taxpayers;

• Collect and account for billions of euro of tax, customs and excise liabilities;

• Help reduce the number of customer contacts;

• Provide effective self-service and electronic options for those who need to contact Revenue; and

• Support Revenue’s business areas with an appropriate and evolving set of tax administration applications and productivity tools.

Revenue is one of the leading users of ICT in the Irish Public Service. Expenditure in 2006 was €78.2million8.

At any one time there is a range of ICT projects ongoing, ranging from multi-year transformation projects to enhancements of existing systems. Once systems are “live”, there is a requirement for ongoing maintenance and live support. In addition, many computer systems undergo significant enhancements each year to fulfil, inter alia, requirements arising from Budget and Finance Bill changes.

Revenue’s ICT has certain characteristics which distinguish it from the general Public Sector. These include:

• It touches all citizens – c. 2.5m taxpayers and over 640,000 businesses (500,000 self employed and 140,000 corporate entities);

• It is complex – it needs to deal with many different tax types;

• It processes large volumes of transactions at particular times of the year;

8 From published figures (includes ICT staff costs). See Section 4.3


• It is driven by legislative requirements that need to be rapidly implemented – many of these are EU driven and thus outside the control of Revenue or indeed the Irish Government;

• There are increasing security demands driven by international crime and terrorism; and

• Government policy on decentralisation and shared data centres could have implications for skills retention and service disruption.

3.5 Context for IT External Resource Requirements Due to the scale and complexity of the ICT projects and systems, and the requirement to have them delivered quickly, Revenue augments its in-house skilled ICT professional teams with external resources.

During 2006, Revenue spent c. €27m on external resources across several major programmes. The majority of this expenditure was in respect of three existing contracts for ITS, ROS and Customs AEP. Following open EU tendering on each occasion, all three contracts were awarded to one prime contractor.

Revenue has previously reviewed how it could reduce its reliance on and requirement for external contractors, how it could maximise value from necessary spending on IT external contractors, and how it could increase its internal ICT capacity. The outcome of these deliberations is reflected in the ICT Strategy 2006-2008, which outlines proposals for a new multi-sourcing strategy and the expansion of its in-house ICT capacity9.

9 See pages 14/15 and 32/36 of ICT Strategy 2006 to 2008


Section 4 Objectives of and Rationale for the Programmes

The focus of this study is on external resources expenditure during 2006. To examine the context in which this expenditure took place, we reviewed Revenue’s Statement of Strategy 2005-2007, Revenue’s Annual Report 2006, the ICT Strategy 2006-2008 and other project specific documentation. We also interviewed senior stakeholders as set out in Appendix 5.

The Statement of Strategy 2005-2007 sets out several key corporate priorities including:

• Achieve collection targets;

• Provide a more risk based approach to non-compliance;

• Increase prosecutions and investigations;

• Progress legacy investigation;

• Provide quality customer service;

• Advance the eBusiness agenda;

• Improve alignment of resources with risk; and

• Improve organisation effectiveness.

On Information Technology specifically it states:

“We remain at the forefront in exploiting technology to enhance service delivery opportunities and to drive productivity. A number of major new systems will be rolled out during the lifetime of this statement. Our approach to service delivery, especially for business customers, will be primarily electronic. We have set specific targets for increased levels of online business, aimed at improving service to our customers and at the reassignment of valuable staff resources to focus on our core business of compliance.”

There is a strong focus on ensuring that the growth in business is met with efficiency gains, rather than cost increases.

The corporate strategy contains the following goal (Strategy 2.3): “Enhance our Capability through technology” sets out several key outputs and performance indicators which are carried through to the ICT strategy 2006-2008.

4.1 Key ICT Objectives The key objectives of Revenue’s ICT programme are:

• Optimise the use of ICT in business processes;

• Increase the integration and enhancement of systems via Integrated Taxation Services;

• Continue to develop solutions to improve productivity and enhance the quality of service to the public; and

• Enhanced Systems to support whole case management, targeting and compliance interventions.


The Revenue’s strategy is to move to electronic means for dealing with Business and increasingly also for PAYE taxpayers. This requires an extensive investment in technology, supported by appropriate business processes and people.

Some key elements of Revenue’s approach are set out in the ICT Strategy 2006-2008 as follows:

• Expansion of eBusiness and electronic self-service facilities;

• Bringing the widest possible range of interactions between taxpayers into electronic channels - unless not justified on cost-benefit grounds;

• The capture of relevant data from customers and other sources to facilitate risk analysis, profiling and tailored customer service;

• Move to more joined-up services to exploit available government and other online resources;

• Continued investment in maintaining the security of online services;

• Participation in the broad eGovernment agenda;

• Adherence to EU directives and eEurope initiatives;

• Adherence to government policy on ICT; and

• Supporting Decentralisation.

4.2 Integration Taxation Systems (ITS) Overview

ROS(real time)

RIS

Revenue MessagingServices

CustomerMailbox

RIS Translations

Revenue ApplicationServices

ITP/CRS

ReturnsReception

PaymentReception

CustomerAccounting

Debits Credits

Returns Generation

Returns Compliance

PaymentsCompliance

Output Management

Misc.MIF

CCP/iCTRSIBISVRT

TransactionReview

Integration

Bus Intelligence

IBIREAPCIF

CSI Stack

Case Mgt.Customs

eBiscusEskort

Reach /Other

agencies

PAYECredits

ITP Reports

Revenue.ie

IC

CCN/CSI

RIS


CustomerMailbox

RIS Translations


CSI Stack

ROS

Revenue.ie

CCN/CSI

Channels –Inbound

Messaging ITS Messaging Channels –Outbound

Reach / Other

agenciesLPA(Real timeinterface)

ROS(batch)

Registration

CAP

ExciseDuty Entry

Integration

IntegratedAccounting

PAYEEmployments

Figure 4.1: Current ITS environment

Revenue takes a consolidated cross-Tax Head approach to dealing with the wide range of taxes and duties for which it is responsible. This provides benefits in improved service to the taxpayer, better compliance and better yield. This is supported by an integrated set of common software applications which address a number of business needs including:


• Maintenance of the national tax register and tax agents file;

• Cross tax debt management;

• Customs, excise and related requirements;

• Consolidated enforcement of delinquent tax accounts;

• Comprehensive management information and budgetary projection;

• A common framework for billing and accounting;

• Enhanced audit administration supported by risk assessment;

• Pay and file capabilities on the internet; and

• A range of information services.

The current Revenue ICT environment consists of three layers:

• The Integrated Taxation Services (ITS) core;

• The communication channels centred around the Revenue On-Line Service (ROS); and

• The messaging hub or Revenue Integration Services (RIS).

Revenue’s core applications for taxation, customs and excise reside within the ITS/ROS environments. The public interact via ROS, while RIS provides the store and forward and message translation facilities between it and the core, as well as gateways to the Government eBroker and the EU’s communication systems.

The major functions administered under the Integrated Taxation Services (ITS) framework are:

• PAYE Employers (PREM);

• Employee PAYE/PRSI Tax;

• VAT;

• Income Tax;

• Corporation Tax;

• Customs Duty;

• Excise Duty;

• CAP;

• Capital Gains Tax;

• Relevant Contracts Tax;

• E-Levy; and

• Elements of VRT.

Other taxes covered under the umbrella of business taxes are:

• Special Investments Tax;

• Dividend Withholding Tax;

• EU VAT;

• Relevant Share Option Tax;

• Deposit Interest Retention Tax;

• Betting Duty;


• Life Assurance Exit Tax;

• Investment Undertakings Tax;

• Professional Services Tax; and

• Special Savings Investment Account.

In addition to the public facing and internal on-line systems described elsewhere in the report, the ITS system has a high volume daily batch schedule which must be completed within a limited timeframe. Some 473 million transactions were processed during 2006, of which just 23,695 records required intervention. This represents a 99.995% success rate of transactions processed. The Live support team maintains this success rate by ensuring all batch programs run smoothly, checking that all activities have been completed successfully for that day/night and remedying any problems.

Revenue is engaged in a series of major business programmes covering the years 2006 – 2009. This review concentrates on the following IT projects which were developed during 2006 as part of Revenue’s overall programme to improve its capability through technology. This review looks at the use of external resources in the eight areas of the ICT environment as defined by Revenue. These are:

ITS Business Taxes

In this review “ITS Business Taxes” refers to all maintenance and development work carried out in 2006 on Revenue’s core Integrated Taxation Services (ITS) applications. These include Integrated Taxation Processing (ITP), a common transaction processing framework for all taxes and duties administered by Revenue, and the Common Registration System (CRS) which provides a consolidated customer register for all tax paying entities and their agents. Large-scale developments of applications within the ITS/CRS Framework (e.g. PAYE redevelopment, Case Management) are dealt with in separate sections of this review, but maintenance of existing systems lies within ITS Business Taxes.

PAYE

“PAYE” refers to all development work carried out in 2006 on the PAYE application. This included a major enhancement to provide PAYE employees with on-line facilities via the web and other channels. The work also encompassed the release of the various PAYE business functions required during the calendar year including the development of cyclical items such as bulk and rolling Automatic Carry Forward (ACF) systems and the implementation of budgetary and Finance Bill requirements. For the purposes of this review, it also covers live support work (stabilisation programme) to address residual data issues from the old PAYE system to ensure that the new PAYE application successfully bedded-in to the live ITS environment.

Case Management

Revenue operates a number of case management systems to service various facets of tax compliance, including debt management, audit and prosecution. In this review “Case Management” refers to all maintenance and development activities carried out in 2006 on these systems including Active Intervention Management System (AIM), Audit Case Management (ACM) and Prosecution Case Management (PCM). These systems have latterly been brought under the Integrated Case Management umbrella, which provides for single sign-on and a common view across cases being worked on.


“Business Intelligence” refers to all maintenance and development work carried out in 2006 on Revenue’s data warehouse and the related applications which comprise Revenue’s Integrated Business Intelligence (IBI) portal. It includes information management work for


the Risk Evaluation and Profiling system (REAP), the sourcing and integration of external data sources both public and private sector e.g. Dun & Bradstreet, and the automated matching of data received without a PPSN or similar reference number.


“Technical Architecture/Standards” refers to the maintenance and development of the Revenue Integration Services (RIS), the creation of a 24x7 high availability environment for Customs, the introduction of Information Technology Infrastructure Library (ITIL) the internationally recognised service management standard for Information Technology, and specific technical support around various products.


“AEP” refers to the development of the new Customs Automated Entry Processing application and its integration with the existing ITS environment. This application was developed to enable Revenue to comply with EU legislation on the harmonised and codified Single Administrative Document (SAD) along with the new pre-arrival and pre-departure summary declarations. It replaced the existing AEP system and allows for direct interaction by Traders via inbound and outbound channels developed in the Revenue On-Line Service (ROS).

Revenue On-Line Services (ROS)

“ROS” refers to the maintenance and development work carried out within Revenue On-Line Service. ROS is an internet facility, which provides Revenue customers with a quick and secure facility to file tax returns, pay tax liabilities, access their tax details online on a 24-hour basis and to provide required details of imports to and exports from Ireland. ROS is the primary online channel for customer interaction with the ITS applications; others include Interactive Voice Response (IVR), Short Messaging Service (SMS) and secure File Transfer Protocol (FTP).

Other Items (MIF, TRS, CCP and miscellaneous)

“Other Items” refers to any expenditure within ICT that is not included in the above seven categories. This includes Management Information Framework (MIF) a framework for financial management and performance measurement, Tax Relief at Source (TRS) system for calculating relief in respect of medical insurance premiums and mortgage interest relief and the Customer Contacts Project (CCP), a programme initiated to improve customer service capabilities through technology solutions, in particular for the PAYE taxpayer.

For completeness, we have included below the complete list of programmes planned for 2006-2009.


Table 4.1 Planned ICT Projects 2006 – 2009

This list is not static and continues to evolve as per EU, Government and Revenue priorities. Changes are reflected in the version maintained in the Innovation and Development section of the Revenue Performance Report, which is published monthly for MAC review.


4.3 Overview of ICT Expenditure Trend and Budget Projections The table and graph below set out the expenditure for 2005 and 2006 and the projected budget for 2007.

Area Official Outturn 2005

€’000

Official Outturn 2006

€’000

Budget for 2007

€’000

Computer Capital 8,662 10,642 11,398

Computer Non-Capital 12,370 14,839 14,800

Telecommunications Services 4,411 4,813 4,500

Telecommunications Equipment 1,311 1,500 1,200

External Resources and Consultancy

17,669 27,076 26,000

Information Society Funding (ROS)

4,641 n/a n/a

Internal Staff Costs 18,300 19,300 21,200

Totals 67,364 78,170 79,098

Table 4.2 ICT Expenditure 2005 – 2007

ICT Expenditure 2005 - 2007

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

€’000 €’000 €’000 Official Outturn 2005 Official Outturn 2006 Published Estimate 2007

Year

Expenditure (€'000)

Computer Capital Computer Non-Capital Telecommunications Services Telecommunications Equipment External Resources and Consultancy Information Society Funding (ROS) Internal Staff Totals

Figure 4.2: ICT Expenditure 2005 - 2007

The cost of ICT generally rose from €67.3m in 2005 to €78.2m in 2006. The largest component of this was the rise in external resources expenditure – which is the subject of this review. The remaining sections of this chapter set out in more detail the components of the external resources expenditure and links them to the outputs and outcomes achieved.


4.4 ITS Business Taxes ITS Business Taxes

In this review “ITS Business Taxes” refers to all maintenance and development work carried out in 2006 on Revenue’s core Integrated Taxation Services (ITS) applications. These include Integrated Taxation Processing (ITP), a common transaction processing framework for all taxes and duties administered by Revenue, and the Common Registration System (CRS) which provides a consolidated customer register for all tax paying entities and their agents. Large scale developments of applications within the ITS/CRS Framework (e.g. PAYE redevelopment, Case Management) are dealt with in separate sections of this review, but maintenance of existing systems lies within ITS Business Taxes.

4.4.1 Overview and Background The main taxes covered under the umbrella of business taxes are:

• Employers PAYE/PRSI (PREM);

• Employees PAYE/PRSI;

• VAT;

• Income Tax;

• Corporation Tax;

• Capital Gains Tax;

• Relevant Contracts Tax; and

• E-levy.

Other taxes covered under the umbrella of business taxes are:

• Dividend Withholding Tax;

• EU VAT;

• Relevant Share Option Tax;

• Deposit Interest Retention Tax;

• Betting Duty;

• Life Assurance Exit Tax;

• Investment Undertakings Tax;

• Professional Services Tax; and

• Special Savings Investment Account Tax.

Tax Clearance functionality is also covered.

The areas of the ITS environment that were affected by the Business Taxes project are illustrated graphically below:


ROS(real time)

RIS


CustomerMailbox

RIS Translations


ITP/CRS

PaymentReception

Misc.MIF

CCP/iCTRSIBISVRT

Integration

Bus Intelligence

IBIREAPCIF

CSI Stack

Case Mgt.Customs

eBiscusEskort

Reach /Other

agencies

Revenue.ie

IC

CCN/CSI

RIS


CustomerMailbox

RIS Translations


CSI Stack

ROS

Revenue.ie

CCN/CSI

Channels –Inbound


Reach / Other


ROS(batch)

Integration

PAYEEmployments

CustomerAccounting

Debits Credits

Returns Generation

Returns Compliance

PaymentsCompliance

Output Management

TransactionReview

PAYECredits

ITP Reports

Registration

DSFAInterfaces

ExciseDuty Entry


TaxClearance

ROSInterfaces

Changed forBT 2006

Unchanged for BT 2006

Key:

ReturnsReception

Figure 4.3: ITS environment and the systems affected by the Business Taxes project

4.4.2 Objectives of developments in 2006 • ITS Business Taxes developments: This refers to a number of targeted improvements

to services across ITS and ongoing enhancements of business taxes functionality within ITS as recommended by the ITS project board and sanctioned by ITEX. The more significant developments related to ROS refunds, the reduction/elimination of screening periods for Inspectors’ estimates for Employers PAYE, VAT and RCT, the generation of a new series of work items from income tax and corporation tax returns and corporation tax refund arrangements;

• ITS Maintenance: This area covers the ongoing live support of the ITS framework along with routine maintenance and bug fixing; and

• Annual Budget and Finance Bill changes: This includes mandatory changes across many taxheads arising from the Budget and Finance Bill introduced by the Minister for Finance.

4.4.3 Inputs In 2006 €6,752,598 was spent on ITS Business Taxes developments and support of ITS systems. Of this the majority €5,444,422 was spent on external resource with €1,500,000 of this expenditure being incurred by new developments. Live support of the existing ITS systems cost €4,457,827 for 2006 with €3,944,422 of that attributable to external resource.


External Resource Costs

€

Internal Resource Costs

€

Total Costs

€

ITS Business Taxes 1,500,000 794,771 2,294,771

Live Support 3,944,422 513,405 4,457,827

Total 5,444,422 1,308,176 6,752,598

Table 4.3: ICT Business Taxes Inputs

4.4.4 Activities Standard activities associated with software development and maintenance including:

• Specification of Requirements;

• Analysis and Design;

• Building;

• Testing;

• Live Support;

• Change Management;

• Project Management; and


4.4.5 Outputs The major pieces of work produced within ITS Business Taxes were:

• The Budget and Finance Bill changes required for all tax systems were successfully implemented;

• Reduce/Eliminate screening period for Inspectors Estimates: For Prem, VAT and RCT, inspectors’ estimates are held for a period of time before they are actually issued. This is to allow additional time for the customer to pay the balance due in a particular period. The screening period for RCT was removed and was reduced for PREM and VAT;

• RCT35/RCT30 letter: The RCT35 is an informational return. It should reflect the figures from all the RCT30’s submitted that year. The comparison of these figures was previously done manually. A letter is now issued electronically where the RCT35 figure is less than the RCT30 total figure and the discrepancy is greater than €500;

• New work-items: A series of new work-items were generated based on the Form11 and CT1’s coming from ROS;

• Surcharge of late CGT returns: Surcharges are raised against Form11 returns that are filed late. The same surcharge is now applied to the CGT part of the Form11 and for CGT1 returns;

• Load & View of the Form1 Firms return: This return is submitted by partnerships. This allowed returns filed via ROS to be viewed in ITP;

• Corporation Tax Electronic Refunds: CT cases could previously opt to have refunds sent to them by cheque or via EFT to a nominated bank account. CT cases are now forced to supply their bank account details in order to receive their refund. This does not apply to foreign cases; and

• System Test support was also provided for ITS Business Taxes developments, live support releases and the PAYE developments.


The ITS live support team ensured all batch programs ran smoothly and checked that all scheduled activities had completed successfully for that day/night. Any problems or issues that occurred were investigated with a quick turnaround of the resolution of the issue. Interventions included the rerunning of the particular activity, or investigation and resolution of any transactions that failed. The Live Team implemented over 100 minor code fixes in 2006.

In 2006, the live support team was also responsible for all new CRS Nightly Interface (automated links between the CRS and ITP applications) development work as well as ongoing support. During the year, 32 code changes were made to the Interface as well as a number of new development tasks.

4.4.6 Outcomes The overall benefits of the Business Taxes development in 2006 are as follows:

• Quicker processing of ROS refunds: Due to the prioritisation of refunds for ROS customers, these customers will have their refunds processed quicker and therefore receive a better service from Revenue than non-ROS customers;

• Automatic comparison of RCT returns: Before 2006, no automatic comparison was done between the RCT35 and the RCT30. The new RCT35/RCT30 letter should improve the compliance greatly on this tax;

• Increased compliance from CGT: Surcharges raised on late CGT returns will lead to an improvement in compliance as customers will submit their CGT returns on time; and

• Reduced number of cheques issuing: As CT cases are being forced to receive any refunds via their bank account, this reduces the number of cheques being issued from Revenue and therefore reduces costs and saves on resources.

4.5 PAYE

4.5.1 Overview and Background Pay As You Earn (PAYE) refers to the various applications required to operate the PAYE System within the ICT environment. During 2003, Revenue carried out an assessment of various options to deliver a new PAYE system. This review evaluated three options:

• Standalone;

• Semi-integrated; and

• Integrated.

In August 2003 Revenue went to tender for support with the development of enhanced ITS, to deliver on the PAYE/PRSI Employees business requirements. The following functionality was specified in the Request for Tender documentation:

• Conversion of registration and financial data from the existing PAYE mainframe systems;

• Generation of returns, notices, forms, and letters applicable to PAYE customers;

• Record receipt of return forms and the compliance procedures in relation to outstanding returns;

• A common calculation system to be used by multiple ITS and ROS processes to ensure uniformity in tax calculations;

• Provision of an overall accounting picture of each customer;

• A workflow facility to deliver and manage work generated within the system;

• Internal and external interfaces; and

• ICT developments.


Following a competitive tendering process, the contract was awarded to Accenture. The ICT components of the PAYE redesign project commenced in January 2004.

The re-development of the PAYE and P35 systems affected a number of different areas in the ITS environment. Principally the core ITP functions were revised and enhanced and a number of new functions were added. The migration of the Common Registration System (CRS) from the proprietary Bull Mainframe to the UNIX environment was a prerequisite for the release of the redesigned PAYE system. This migration in itself was a significant development. The diagram below illustrates the areas impacted by the PAYE redesign project. Subsequently the PAYE channel elements in ROS and Revenue.ie were added.

ROS(real time)

RIS


ITP/CRS

ReturnsReception

PaymentReception

CustomerAccounting

Debits Credits

Returns Generation

Returns Compliance

PaymentsCompliance

Output Management

Misc.MIF

CCP/iCTRSIBISVRT

TransactionReview

New forPAYE

Changed for PAYE

Key:

Integration

Bus Intelligence

IBIREAPCIF

Case Mgt.

Reach /Other

agencies

PAYECredits

ITP Reports

Revenue.ie

IC

CCN/CSI

RIS


ROS

Revenue.ie

CCN/CSI

Channels –Inbound


Reach / Other


ROS(batch)

Registration

CAP

PAYEEmployments

Figure 4.4: ITS environment and the systems affected by the PAYE project

Revenue decided to release the re-designed PAYE, P35 and migrated CRS systems on schedule in October, 2005, though with some non essential functions yet to be completed. A major consideration was to allow the roll out of on-line services for PAYE customers in 2006. The other benefits of this implementation are listed in 4.5.6 below. If the release had been deferred, the 2006 delivery dates for other projects could not have been achieved and there would have been a knock-on effect to 2007 and later years.

Given the scale of the PAYE development, there were the normal and expected teething troubles and minor bugs inherent in any major new piece of software whether public or private sector. However, due to issues around old data content and tighter new business rules in the on-line components, a more formal “stabilisation” process was required to be put in place in March 2006 to address the issue of data quality in the PAYE development project. This process is discussed in section 4.5.6.

4.5.2 Objectives of developments in 2006 The main developments required in 2006 were:

• Implementation of PAYE Finance Act changes (December 2005 budget) and commencement of December 2006 budget changes;

• Development of cyclical programs such as the PAYE Automatic Carry Forward System (ACF) process. ACF is a process that allows existing customer data to be brought forward to the following year, removing the need for internal Revenue staff to re-enter


it. Another similar development was the process to enable the production of a preliminary bulk issue;

• A new process to allow on-line access and modification facilities for PAYE tax-payers to their data; and

• Stabilisation and bedding-in of the major development of October 2005.

4.5.3 Inputs A payment of €4,471,844 for work already delivered in 2005 was made in 2006 and there was an adjustment of €599,266 for credits10 owing after the end of year reconciliation in 2006. The nett amount of €3,872,578 includes expenditure for the following (in addition to PAYE, P35 and CRS migration development effort):

• ITS ICM (AIM) Releases and Instructions;

• Registration of Minor Taxes in CRS;

• Tax Clearance for Foreign/Non Resident customers in CRS;

• Introduction of Debits/Credits Processing in PAYE; and

• Registration of Betting Duty in CRS.

New development costs for 2006 were €2,100,000 for external resources and €463,235 for internal resources. The PAYE stabilisation programme incurred costs of €1,100,000 for external resources and €227,000 of internal resources.


€


€

Total Costs

€

PAYE Stabilisation 1,100,000 227,000 1,327,000

New Development 2,100,000 463,235 2,563,235

Total 3,200,000 690,235 3,890,235

Table 4.4. PAYE Inputs




• Building;

• Testing;

• Live Support;




4.5.5 Outputs The major pieces of work produced within PAYE in 2006 were:

10 See Section 6.3.1 for details of ITS contract


• On-line services release was successfully implemented in June 2006. This development facilitated the retrieval and modification of personal data by PAYE customers;

• Bulk Automatic Carry Forward System (ACF): This sets up a 2007 record for all PAYE customers based on the 2006 information. This was run live in July 2006;

• Rolling ACF: Once Bulk ACF has set up the 2007 record any changes to the 2006 record are carried forward on a weekly basis to the 2007 record. This prevents users from having to input the change to both years;

• Preliminary Bulk Issue: A bulk issue is run prior to the budget changes in December to issue employer level output to every employer. This output shows the 2007 PAYE record for each employee they have. This allows employers to update their systems with the latest PAYE information for their employees for the coming year;

• 2005 PAYE budget changes: Any PAYE changes announced in the December 2005 budget are implemented. This includes tax rate changes, widening of the tax bands etc.;

• Bulk Issue: A full issue is generated for all employers and employees. This shows the up-to-date 2006 record and includes any budget changes;

• P45(3): This part of the P45 form is used by the new employer when setting up a new employment. This development allowed ROS customers to file their P45(3) online with ITS automatically setting up the new employment. Note that this functionality did not go live until March 2007 but the development work was done in 2006; and

• Change requests and modifications from the October 2005 release. These included:

• Auto allocation of credits when employments are commenced;

• Auto processing of P45s;

• New DSFA interface to take in Child Benefit and Carers information;

• Issuing of P21s and Tax Clearance Certificates (TCCs) via ROS; and

• Stabilisation of the October 2005 release of the new PAYE system.

4.5.6 Outcomes • Revenue is fully satisfied with the PAYE system which is now used daily by

approximately 1,000 Revenue staff in their customer service and compliance activities. The online services available through the Revenue website and through Reach are used by an increasing number of PAYE Tax-payers. The new system has been fully proven and has successfully completed all annual tasks;

• All computer systems, particularly large and complex custom developed systems, require a period of stabilisation after going live. This is to work out minor bugs and settle the system in – similar to the way a new building requires a ‘snag list’ to be sorted out over time. The implementation of the redesigned PAYE and P35 systems and the accompanying CRS migration were of an unprecedented magnitude and required a separate stabilisation effort which was put in place in March 2006. Most of this effort can be attributed to the quality of some old tax credit data on the pre-converted files and the treatment of inconsistent data by the new PAYE system which has “tighter” business rules. The stabilisation process cost approximately €1.1m in terms of external resources expenditure in 2006; and

• To reduce the risk of future projects experiencing delays over the development life cycle e.g. ranging from timely sign-off of business requirements through to testing and consequent knock-on effects on delivery dates, Revenue has put in place a new quality assurance and testing function. Part of this function will ensure that Revenue projects are adequately resourced both on the ICT and business sides.

Other Outcomes associated with the Implementation of Redesigned PAYE, P35 and Migrated CRS systems in 2005.


• Increased efficiency in processing queries: Queries from the public can now be dealt with more quickly and efficiently than the previous paper based system. Specific examples which illustrate the increase in productivity since the introduction of PAYE into ITS are:

• The amount of unworked post is now at its lowest level since June 2004 notwithstanding an increase in the volume of incoming post from 1.5m items in 2005 to 1.9m items in 2006. Specific examples are:

• The amount of unworked post as of 31st March 2005 was 103,047. On the same date in 2006, this had reduced to 76,678. On the same date in 2007, this has reduced again to 59,831; and

• At the beginning of 2006, 9,292 returns were waiting to be worked. By the 30th June 2006, this had reduced to 6,164. The latest count as at the 15th June 2007 has the figure at 2,121.

• This improvement is expected to release administrative resources to perform compliance duties.

• Elimination of the recording of excess credits: The new system ensures that the overall total value of credits is correct. The old PAYE system could potentially allow excess credits to be recorded. While these situations were amenable to correction by examination of the individual cases, given the volume of PAYE taxpayers, it was also possible for them to go unidentified. The new system eliminated this situation;

• Quicker repayments to PAYE customers: ITS enables repayments to be issued to the customer more easily and quickly than in the old system. The introduction of a transaction review process has increased security around the repayments to customers;

• Offsetting PAYE repayments: As PAYE is integrated with the other ITS taxes, incorrect repayments can be prevented by automatically offsetting the credit to other PAYE periods or other ITS taxes. This also improves compliance as repayments are stopped if other Revenue returns are outstanding; and

• Use of work-flow technology: As work-items can be automatically generated by the system and sent to the appropriate team/user, this prevents thousands of pieces of paper from being transferred around the organisation.

The main benefits of the P35 redevelopment are:

• Enhanced P35 online functionality facilitated Customer Services by integrating P35 processing with the ITP framework. This allowed for inputting amendments, transfers, and cancellation of employee details on line;

• P35 Batch processing was enhanced as the new system facilitated faster updating of ROS P35 returns on a nightly and or weekly basis. The Department of Social and Family Affairs and PAYE units now have access to current year data as it arises;

• The re-design also enhanced the input of P35s at source to ROS. Additional validation checks were created so that any P35s that were entered incorrectly were not accepted and the customer was alerted/directed to make the required changes. This reduced the number of work items for staff to deal with and also enhanced customer services; and

• Through automation and various enhancements the number of staff directly involved in P35 processing reduced from approximately 50 to 22. The units were re-designed as multi-functional units dealing with all aspects of the work.


4.6 Case Management

4.6.1 Overview and Background Revenue operates a number of case management systems to service a variety of case working needs including AIM, ACM and PCM. The Active Intervention Management System (AIM), a debt management and compliance case management system, is used both in the Collector General’s Division and the Regions for debt management selections and activities. Audit Case Management (ACM) is used in the Regions to manage and record tax audits. Prosecution Case Management (PCM) is used in the Investigations and Prosecutions Division to manage criminal prosecutions for tax evasion. In addition there are a number of small project based systems (sometimes described as “case management lite”) for managing blocks of cases arising from the Offshore Assets Group (OAG) and Single Premium Investment Product (SPIP) legacy investigations, the Suspicious Transaction Reports (STR) Project and the Nursing Home refunds scheme.

Figure 4.5: Case Management Overview

4.6.2 Objectives of developments in 2006 The following were the objectives of Case Management developments for 2006:

• Integrated Case Management (ICM) (First released live February 2007): This project provided users with access to various case management systems through a


single sign-on facility. The case management systems selected for this new approach were Active Intervention Management (AIM) and Audit Case Management (ACM). ICM now provides the case management user with access to all of his/her Teams/Interventions/Work Items incorporated into one new common front-end screen. The AIM and ACM systems are then seamlessly invoked from within this application and the user continues to work cases through these systems as per normal. Changes to the AIM and ACM applications were also required to accommodate this ICM development; and

• Lite Case Management (ICMLite) (First released Live 2007): This application provides a generic lightweight case management facility via the RevNet intranet portal. Its initial developments have catered for the case working requirements of the Legacy Investigations (i.e. the OAG Project and the SPIP Project) and the Suspicious Transaction Reports (STR) Project. Its generic design can cater for other lightweight case management requirements such as Nursing Home Repayments. The source data of this application (i.e. the data received from the various financial and insurance bodies) resides in the Integrated Business Intelligence (IBI) application but can be accessed directly from ICMLite.

4.6.3 Inputs Total expenditure on case management in 2006 was €1,517,946. Of this €642,946 was for external resource and €875,000 for internal resource.


€


€

Total Costs

€

Total 642,946 875,000 1,517,946

Table 4.5: Case Management Inputs




• Building;

• Testing;

• Live Support;




4.6.5 Outputs A number of new applications were introduced. These included:

• Audit Case Management extract for Management Information Facility;

• Offshore Assets Group and Single Premium Investment Product reception systems;

• SPIP (2nd Phase – to include ‘nil declarations’) Data Capture; and

• Nursing Home Reception System.


In addition the Case Management team made a number of enhancements to existing applications. These included:

• Revenue Enforcement System (RES);

• Case Select;

• Audit Case Management;

• Integrated Taxation System to AIM extracts;

• Case Management Administration/Security System;

• Sheriff Solicitor Enforcement; and

• Prosecutions Case Management.

4.6.6 Outcomes • Increased capacity for case workers to deal with customers from a more integrated

perspective;

• Performance and throughput of case-working workload improved; and

• The ICM development increased throughput and was directed at improving customer compliance levels. ICMLite application enabled the caseworkers to improve compliance levels by working legacy investigation cases.

4.7 Business Intelligence

4.7.1 Overview and Background Revenue’s Integrated Business Intelligence (IBI) application provides a portal style customer relationship management system. It helps Revenue staff to manage information more effectively. It is a “one stop shop” for all the tools and applications which access Revenue’s corporate data warehouse. The warehouse contains data and aggregates from operational systems as well as data from external sources, including government departments, state agencies, financial institutions and other sources.

Figure 4.6: Business Intelligence overview


4.7.2 Objectives of developments in 2006 The main objectives of external resources expenditure on the Business Intelligence application in 2006 were to support and extend the delivery of information and knowledge management solutions to the business, and to make the platform more resilient, providing 24 x 7 availability.

Specific objectives included the following:

• Provide a facility for viewing and matching external data with internal Revenue data;

• Provide access to and validation of data to support legacy investigations;

• Provide access to and validation of data to support Offshore Assets Group investigation;

• Provide access to data to support the Single Premium Insurance Policy investigation;

• Support for REAP providing access to Form11 and CT1 data;

• Support for PAYE reporting;

• Support for Relevant Contracts Tax campaign;

• Support for IT modelling using a custom developed SAS application and to migrate the application to a new hardware platform using the latest version of SAS9 software;

• Develop a custom built Revenue Collection Profile EIS for Coal Tax, RCT and PSWT; and

• Support ad hoc requests for both data and information to business areas.

4.7.3 Inputs The total cost of delivery of 2006 maintenance and developments was €1,094,493. Of this €562,448 was for external resource and €532,045 was for internal resource.


€


€

Total Costs

€

CIF 520,760 532,045 1,052,805

IBI 41,688 0 41,688

Total 562,448 532,045 1,094,493

Table 4.6: Business Intelligence Inputs




• Building;

• Testing;

• Live Support;





4.7.5 Outputs The main output in this area was the enhanced delivery of information to the business via the Integrated Business Intelligence portal. Specifically, this included:

• System for matching Revenue data with external data;

• Support for PAYE reporting;

• Support for Relevant Contracts Tax campaign;

• Support for IT modelling using a custom developed SAS application and migration of the application to a new hardware platform using the latest version of SAS9 software;

• Custom built Revenue Collection Profile EIS for Coal Tax, RCT and PSWT; and

• Responses to ad hoc requests for both data and information to business areas.

4.7.6 Outcomes The main outcome from these developments was better use of Revenue and external information by Revenue resources, leading to improved targeting of customers, increasing compliance and evasion detection.

4.8 Technical Architecture and Standards

4.8.1 Overview and Background The main developments in Technical Architecture and Standards for 2006 were the maintenance and development of the Revenue Integration Services (RIS), initial work on a High Availability environment for Customs, and the introduction of ITIL service management.

The RIS is a key piece of the technical infrastructure. It acts as a single message hub between Revenue’s internal systems and public facing systems. This allows messages to be received into and sent out from the back-office applications as well as providing a platform for real-time web service calls into ITS applications. RIS was originally implemented in 2004 to support CAP messaging between Revenue and the Dept. of Agriculture (via REACH).

Due to the increasing complexity of the Revenue systems, it was necessary to carry out an Operational Maturity Assessment on the Revenue Computer Centre (RCC). This work started in the autumn of 2005 and focused on the Service Support side of the Information Technology Infrastructure Library (ITIL) service management methodology that encompasses the change, configuration, release, incident and problem management disciplines as well as the service desk function. The results of this indicated a low level of maturity within Revenue for change and configuration management processes and so formalised procedures were designed for these and rolled out to the Revenue Computer Centre (RCC) in the later part of 2005.

4.8.2 Objectives of developments in 2006 The main objectives of the RIS developments in 2006 were focussed on extending its capability, performance and supporting the key PAYE online and AEP projects. The developments break into 3 distinct projects:

• Finalising a technical upgrade of RIS to facilitate load balancing and failover;

• Development of PAYE online web services; and

• Planning, design and initial build of RIS components required for AEP (Customer mailbox, translation layer, etc.).


These separate projects built upon each other incrementally and have greatly increased the RIS functionality, reliability and scalability.

The main objectives for the ITIL work carried out in 2006 were:

• The daily management of the change and configuration management functions;

• The extension of the scope of the Change/Configuration Management functions to all applications supported from the RCC;

• To raise the awareness of an ITIL based culture in supporting IT Services supplied by the RCC; and

• To scope and plan a project to introduce an ITIL based Incident Management process and re-launch the RCC helpdesk as the IT Service Desk, the central point of contact for all IT related issues in Revenue.

4.8.3 Inputs Over the course of the year, a number of Accenture resources were involved in the RIS developments. The initial project covering the completion of a technical upgrade started in 2005 consisting of 2 Java Architects. As the project rolled into the next phase of work for the PAYE online services, this increased, with the addition of two Java developers. Once delivered and stabilised, one Java architect plus one Revenue resource initially undertook the third phase of work. This increased towards the end of 2006 with the addition of another 2 resources to build the XML translation engine.

The inputs for ITIL were as follows:

• Change and Configuration Manager: A full time dedicated consultant supplied by Accenture;

• Change Advisory Board Members: 1 hour weekly from Assistant Principal (AP) level management in the RCC;

• ITIL Awareness Trainers: Accenture contracted the services of an expert training company called Fox IT to carry out a number of customised one-day awareness sessions for the support staff in the RCC;

• Incident & Service Desk Implementation Expert: Dedicated resource for the design and implementation of the Incident Management and Service Desk processes;

• Service Desk staff – documenting and training of new processes and changes to the integrated service management tool; and

• Integrated service management tool technical support.

The total cost of the external resources for RIS in 2006 amounted to €1,110,181. The cost of ITIL implementation was €726,207. The internal resource cost was minimal.


€

RIS 1,110,181

ITIL/TA Support 726,207

Total 1,836,388

Table 4.7: Technical Architecture and Standards Inputs


4.8.4 Activities A wide range of technical work was undertaken to allow RIS to operate in a clustered environment. This also required network re-configuration and technical testing before the revamped RIS could be released live.

The following ITIL modules were introduced:


• Configuration Management; and

• Incident/Service Desk.

Revenue conducted workshops to train staff in the steps and tools required to follow the ITIL processes as defined for Revenue.

Revenue carried out customisation and maintenance of the integrated service management tool which is the data repository for the change and incident processes.

4.8.5 Outputs The RIS system is a fully scalable and fault tolerant piece of infrastructure which was subsequently extended to support PAYE online and more recently AEP.

The RIS components required to support the rollout of PAYE online were delivered in June 2006 and have been running successfully since then.

For PAYE, a generic proxy web service was delivered which allows real-time calls through to the backend systems for immediate online validation. Individual web services called by this proxy were also delivered to provide specific PAYE functionality. Some older PAYE self-service facilities were upgraded to work with the new system. This involved the creation of a Revenue PIN for security purposes which was combined with REACH security. This RIS work had to be scheduled to line-up with associated PAYE development work to meet testing and implementation deadlines.

The outputs from the introduction of ITIL were as follows:

• The ability to better manage the complex environments underpinning Revenue’s critical systems;

• An up to date repository with detailed configuration information for all development, test and live ITS environments;

• A weekly change advisory board meeting that evaluates and communicates all medium to large-scale upgrades and releases. An agenda is produced for each meeting and minutes distributed;

• Staff trained in the basics of the ITIL best practises in IT Service Management;

• A central repository of all changes made to live applications implemented by the RCC; and

• An ongoing project due for completion in early 2007 to introduce a formal incident management process and re-launch the IT Service Desk.

4.8.6 Outcomes The initial technical upgrade of RIS was completed and provided a completely scalable system with load balancing and failover capability as required.

The PAYE online service was made available on schedule in June 2006 and has handled many thousands of transactions since then. The availability of the system from a RIS perspective is nearly 100%.

The required RIS AEP work was started in late 2006 and was ongoing into 2007.


4.9 Customs Automated Entry Processing (AEP)

4.9.1 Background and Overview Originally launched in April 1991, Revenue’s Automated Entry Processing (AEP) system is responsible for validation, processing, duty accounting and clearance of customs declarations. The system also checks updated data format, calculations, validations, preferential rates, prohibitions/restrictions and verifies that sufficient credit is available in the Trader’s account.

Due to the introduction by European Regulation of a harmonised and codified Single Administrative Document (SAD) along with the new pre-arrival and pre-departure summary declarations, it was necessary to redevelop the AEP system to allow Traders to have direct access to AEP via ROS and to provide greater scope for flexibility and trader facilitations. The re-developed AEP system was launched on 1st June 2007.

When developing the system, Revenue used the opportunity to deliver other enhancements. These included improved security, improved customer service and improved risk assessment.

The following transactions will be managed/processed through the new Excise Electronic Declaration System (EEDS) rather than through the revised AEP System:

• Excisable products on arrival from other EU member states;

• Excisable products on delivery from tax warehouse for home consumption; and

• The registration of motor vehicles.

The EEDS is fully integrated into Revenue’s existing IT systems including ROS. The application sits within the ITS stack, but utilises the Inbound and Outbound Channels and Messaging Layer to communicate inputs and outputs to the user.

4.9.2 Description of Systems The AEP programme developments carried out in 2006 were:

• EBiscus;

• ITS Customs;

• Integrated Accounting; and

• Other functions including CAP, Excise Duty Entry (EDE’s), Warehouse Warrants and accounting elements of VRT.

Note: These developments were supported by enhancements to RIS as described in the Technical Architecture/Standards section and LPA (Real Time Interface) described in the Revenue On-Line Services (ROS) section.

The areas of the ITS environment that were affected by the AEP programme are illustrated graphically below:


ROS(real time)

RIS


CustomerMailbox

RIS Translations


ITP/CRS

ReturnsReception

PaymentReception

CustomerAccounting

Debits Credits

Returns Generation

Returns Compliance

PaymentsCompliance

Output Management

Misc.MIF

CCP/iCTRSIBISVRT

TransactionReview

Key:

Integration

Bus Intelligence

IBIREAPCIF

New forAEP

CSI Stack

Case Mgt.Customs

eBiscusEskort

Reach /Other

agencies

PAYECredits

ITP Reports

Revenue.ie

IC

CCN/CSI

RIS


CustomerMailbox

RIS Translations


CSI Stack

ROS

Revenue.ie

CCN/CSI

Channels –Inbound


Reach / Other


ROS(batch)

Registration

Changed forAEP

CAP

ExciseDuty Entry

Integration


PAYEEmployments

Figure 4.7: ITS Environment and the Areas Affected by the AEP Programme

4.9.2.1 eBiscus This development included the customs processing engine as well as the risk analysis tool ESKORT.

EBiscus (e-business for customs and trade) enables Revenue to systematically track consignments, efficiently process goods declarations, calculate duties and warrants, and enforce non-tariff measures in real time. The eBiscus suite includes key services and gateways to help customs authorities in EU countries to successfully implement the Multi-Annual Strategy Plan.

ESKORT is a highly configured risk analysis tool that offers a variety of real time (transaction-based) and batch oriented functions for use in customs risk processing. These include:

• Trader accreditation;

• Clearance, pre-clearance and anti-smuggling;

• Audit case selection;

• Passenger screening; and

• Generation of intelligence information (e.g. risk profiles).

4.9.2.2 ITS Customs Introduction of the new AEP system required a number of enhancements to the underlying ITS system. ITS Customs describes all programme activities that affected the functions within the existing ITS environment other than Integrated Accounting. It includes enhancements to the ITP/CRS application as well as enhancements to functions described as miscellaneous areas, Integrated Banking System (IBIS), and Vehicle Registration Tax (VRT).

The new development has enhanced a number of existing CRS application functions. These include:

• Taxhead Registration Functions: an application to register customers for a variety of taxheads including VRT and AEP;


• Relationship Functions: relationship links between different customers. This needed to be extended from the existing 20 types to cater for C&E and VRT requirements;

• Agent Functions: entry and maintenance of agent registration data; and

• In addition the new development has allowed for a single customer view across customs and other taxes within the ITP system.

New functionality was also introduced to improve storage of information. The system can now automatically register cases for the C&E taxhead or the VRT taxhead when required to do so based on interfaces from eBiscus and the payments capture system.

Information transfer from the CRS to ITP was improved from overnight batches to ‘realtime’, allowing instant transactions for VRT and C&E. This functionality is provided for both new and existing customers. In addition CRS/eBiscus Interaction and CRS/Online Payment Captured System Interaction functions have been introduced. This allows the CRS to automatically register certain cases based on business rules and establish which cases are already registered for C&E and VRT and to retrieve name and address information.

Another key area of functionality introduced to the existing applications is within the banking function. This is provided by ITP, CRS, and the IBIS. The functions are described as follows:

• Online functions to allow input, amendment and display of banking details;

• Maintenance function to forward and display high level ‘Banking Status Indicators’ from ITP to CRS;

• Periodic batch functions that establish the funds to be collected from the banks; and

• Periodic batch functions that interact with the banks to collect the funds.

4.9.2.3 Integrated Accounting Integrated Accounting describes the activities related to the development of the Integrated Accounting functionality within the ITP/CRS application. The Integrated Accounting release extends the existing Customer Accounting (CA) ITP subsystem’s management of the maintenance and display of customer financial information to include the management of customs running balances which encompass both financial transactions and activity in relation to deferred and guaranteed items. In addition the new Integrated Accounting functionality allows Revenue to integrate Customs and Revenue accounting systems – thus discontinuing regional accounting systems.

4.9.2.4 Other Functions The other functions included systems to manage the export of goods under the CAP scheme. This involved significant new interfaces with the Department of Agriculture and Food via the REACH public service broker. In addition, new computer systems were developed to manage and/or account for Excise Duty entries, Warehouse Warrants and VRT.

4.9.3 Objectives of developments in 2006 The objectives of AEP are as follows:

• Meeting regulatory requirements: The main objective of AEP is to comply with EU legislative change as detailed in the Single Administrative Document (SAD). All EU member states were required by law to comply with SAD by a deadline of 01 January 2006. This required the development of a new system;

• More accurate customer data supporting improved compliance: One of the aims of the new system is to hold more detailed and more accurate customer data. This is necessary from a compliance perspective and allows for a better projection of Customs revenue;

• Enhanced customer service: AEP enabled a more open market for traders and an improved average turnaround time for imports and exports;


• Integration of Revenue systems: AEP is planned to allow the integration of Customs and Integrated Accounting Systems. This will allow the discontinuation of regional collection systems and will streamline all accounting functions with reference to ITP in relation to all duties and taxes handled by the AEP system;

• Alignment with technology strategy: Development of the new AEP system is planned to allow Revenue to continue its strategic move from mainframe based to open-platform applications. This will provide Revenue greater technical flexibility in the future and remove its reliance on one form of technology (mainframe);

• Improved Risk Management. The inclusion of the Eskort product within AEP has facilitated much more flexible and rigorous risk management of imports and exports; and

• Improved Security: In the post 9/11 world there has been a greater emphasis on security of data and data systems. Furthermore, new security requirements relating to the control of goods internationally have led to new functional and process requirements that needed to be supported by technology.

4.9.4 Inputs Approximately €6m was spent on external resources in 2006 to support the AEP programme of activities. Of this €3.6m was spent on the eBiscus/ESKORT development and €2.4m on the ITS Customs and Integrated Accounting activities. Due to the deferral of the go-live date of eBiscus from October 1 2006 to April 1 2007, there was an extension to the fixed price Accenture contract valued at €247,800 (excluding VAT). This additional amount was paid in 2007.

In addition internal resources with an estimated cost of €538,336 were used in this programme. The table below shows the associated costs for the various AEP programme category costs.


€


€

Total Costs

€

eBiscus 3,602,833 224,640 3,827,473

ITS Customs 1,840,869 246,496 2,087,365

Integrated Accounting 602,911 0 602,911

EMCS/Other EU 0 67,200 67,200

Total 6,046,613 538,336 6,584,949

Table 4.8: AEP Inputs

From an internal resources perspective the ITS Customs and Integrated Accounting project activities were performed by a single project team.




• Building;

• Testing;

• Live Support;





Development of the eBiscus and ESKORT applications commenced in April 2005. During 2006 the development and testing of these applications continued and the applications were released from testing in April 2007.

All ITS Customs and Integrated Accounting activities commenced in July 2006 and ran until June 2007. The original agreed release date was December 2006. This was postponed until April 2007, due to lack of availability of Revenue resources. Following significant monitoring, Revenue judged that the Traders were not ready for the system in April and the release was postponed to 1st June 2007 to give the opportunity to bring the Traders up to speed.

The system went live on 1st June 2007 and the team was retained for a short stabilisation period of 3 weeks. After this time the team was released to other projects (e.g. export control systems and the Income Tax Assessing Programme). Two people remain to support the system.

For each required development and enhancement, the AEP team conducted a full specification for ICT&L Division, to reflect current EU and National provisions, and formed a development, testing, and training plan.

A comprehensive testing programme was conducted, including system testing and user acceptance testing (UAT). End-to-end testing was not possible in 2006, but a plan was put in place for early 2007. The bulk of UAT for eBiscus was completed as was the CRS testing.

All system testing for eBiscus and ESKORT was conducted by the Accenture project team. Testing of other releases was conducted by a dedicated testing team comprising Revenue and Accenture resources, but managed by Revenue exclusively.

No specific AEP training took place during the period under review although a training representative was co-opted onto the AEP project board, and in 2007, full and comprehensive training of users of the new application took place. This included detailed training sessions with traders conducted in weekends immediately prior to go-live.

Project Management was carried out using MS Excel and MS Project tools. The Earned Value Management technique was used to measure progress to give a more accurate view of the true state of the programme status.

During the development process, a communication stream was put in place to prepare traders for the introduction of the new system. This involved providing advice to staff and traders of changes in rules and procedures relating to the existing AEP system, through the issue of information leaflets and trader and staff bulletins. In November and December 2006 seminars were held in Dublin, Cork, Waterford, and Limerick. In addition a Public Interface Testing System (PITS) was put in place from November 2006, to enable traders to test the system, to understand how it worked, and ensure that they were ready for go-live.

A staff guide for the new system was drafted in December.


In addition to the new development activities the existing AEP system was supported in full up to changeover on 1st June 2007.

4.9.6 Outputs The output was a new, fully integrated Customs AEP solution which had a number of additional features:

4.9.6.1 eBiscus/ESKORT The following were delivered as part of the eBiscus/ESKORT stream:

• A new processing engine to cater for the new EU requirements;

• New processing engine to replace mainframe functionality;

• New risk analysis tool and processes;

• Functionality to allow the assessment of customs duties; and

• Control of quotas and other national/EU requirements.

4.9.6.2 ITS Customs The following are the outputs for ITS Customs:

ITP/CRS Enhancements:

• Improved authorisation information, including the ability to check registrations and authorisations;

• Introduction of commodity and warehouse codes;

• Improved Taxhead Registration Functions;

• Improved Relationship Functions;

• Improved Agent Functions; and

• New CRS/Online Payment Capture System interaction functions.

4.9.6.3 Integrated Accounting A range of functions were provided for in the Integrated Accounting release. These were:

• Collection and accounting of customs and excise duties;

• Maintenance of trader balances and bank guarantees;

• Provision of new eBiscus Interaction Functions for AEP/IAC;

• Accounting of Vehicle Registration Tax collections;

• Provision of new Trader Interaction Functions for AEP/IAC; and

• Reports.

4.9.6.4 CAP/DTI enhancements A new CAP system was put in place to interface with the eBiscus/ESKORT application and existing ITP/CRS applications. In addition, new Warehouse Warrants and Excise Duty Entry systems were implemented.

4.9.6.5 Other Items A number of other items were put in place in anticipation of 2007 requirements:

• A full training plan was drafted for users to be implemented in 2007;

• A draft staff user guide;


• A transition plan for setting up a new Help Desk; and

• A draft end-to-end test plan for testing of the fully integrated system.

4.9.7 Outcomes The new Customs AEP system went live successfully on 1st June 2007. In view of the recent release of the systems, some of the benefits had not yet been realised at the time of this evaluation. The expected benefits are as follows:

• Compliance with EU Legislation: The main benefit is bringing the Customs Service Application technology up to the required standard and capability as set down by SAD. This is a legislative requirement of all EU states;

• Improved Risk Analysis: The new system has a much more sophisticated risk analysis through integration of WMData’s ESKORT product;

• Single customer view: The new system allows Revenue to look at traders as a single entity from a tax perspective (i.e. an entity that will also be registered for other tax types like PAYE and VRT) and this will lead to better profiling of customers and more accurate measurement of risk;

• Alignment with Overall Technical Strategy: Development of the AEP system is in line with the stated technical strategy of moving from mainframe based applications to open platform technology. This allows Revenue to take advantage of a wider range of technologies and adapt more easily to future technical advances as well as reducing its dependency on legacy mainframe technology. A stated goal of the ICT Technology Strategy is to have moved entirely from the mainframe environment by the end of 2009. Moving AEP from this technology is a significant step in the process, which should lead to lower maintenance costs;

• Improved Functionality: The new system has improved validation and authorisation functionality allowing for more accurate customer information and increased compliance;

• Improved Usability: The new system is easier for the trader to use and has improved customer service;

• Increased Availability: The downtime of the new system has been decreased; and

• Decreased Turnaround Times: As transaction times are shortened, turnaround times for the process are also lowered. Since its launch AEP has seen a marked decrease in transaction times for traders.

Although a formal benefits capture and quantification procedure has not yet been put in place, it is the stated intention of the AEP Programme Managers to do so once the system has been operational for a sufficient period – currently estimated at six months from go-live. The only baselines currently recorded are the number of Direct Trade Inputs (DTI) at import (97%) and export (90%), but there is an intention to identify additional key performance indicators. Performance and usage metrics are also provided by Revenue’s Integrated Business Intelligence function, but the practices are not yet in place to use this information to drive action.


4.10 Revenue On-Line Services

4.10.1 Overview and Background ROS is an internet facility, which provides Revenue customers with a quick and secure facility to file tax returns, pay tax liabilities, and access their tax details online on a 24-hour basis. The strategic objectives of Revenue On-Line Services were described in the original Request for Tender11 as follows:

• To increase voluntary compliance by making it easier for our customers to deal with Revenue, and by reducing compliance costs;

• To provide a business solution to the requirement to “..encourage the electronic filing of tax returns and declarations and other electronic information exchange..” as envisaged in the Statement of Strategy;

• To improve Revenue’s customer service by providing easy access to Revenue services, faster response times and eventually a 365 day a year service which will fulfil the strategy to provide “..better on-line services for customers and improved information and data exchange with third parties in the emerging Information Age Society”;

• To deliver on Revenue’s requirements under the Government’s Information Age strategy by keeping pace with and, where appropriate, leading Information Technology developments “.. to underpin the effectiveness of our customer service, accounting, audit and compliance programmes ..” so that Revenue is “.. part of the most efficient and effective public administration in Europe by the year 2010..”; and

• To enhance job satisfaction for Revenue staff by reducing or eliminating routine processing duties and releasing staff for more rewarding and satisfying work.

Following a competitive tendering process, the contract to provide external consultancy services for the development of the Revenue On-Line Services system was awarded to Accenture in 1999. This contract was based on a time and materials model. It has been renewed annually since then, including in 2006, the year under review. While the contract should have been re-tendered after three years, this did not happen as a result of pressure to deliver an extensive and urgent development schedule. A new contract will be put in place as part of the developing procurement strategy which commenced in 2007.

In July 2001 Revenue received an eGovernment label from the European Commission for the ROS service, which was judged to be one of the best practices of its type. In 2005 the ROS service received the Gold Medal Award in eGovernment. The functionality provided by ROS has been extended over the years to cater for 22 tax types. Contractor’s tax and eStamping are the next scheduled major developments. The feasibility of adding eRegistration is being examined. The current ROS applications now allow customers to:

• File returns online;

• Make payments by laser card, debit instruction or by online banking for Income Tax only;

• Obtain online details of personal/clients Revenue Accounts;

• Calculate tax liability;

• Conduct business electronically; and

• Claim repayments.

4.10.2 ROS developments in 2006 Revenue On-Line Services’ main focus for 2006 was to bring the new PAYE application online. Beyond this a number of maintenance, updates and minor enhancements were also carried out. The key objectives, as set out by Revenue, were as follows:

11 Request for Tender for Revenue On-Line Services, July 1999


• More efficient tax collection by reducing the administration effort compared to the old paper based system, freeing resources to focus on compliance activities;

• Improved Security;

• Improved customer service, by allowing online self-service access to information and functions, including claiming tax credits, applying for refunds, etc.; and

• Improved technical architecture.

4.10.3 Inputs €4,400,000 was spent on external resources in 2006 to support the ROS applications. In addition a further €1,023,954 of internal resources was used. Total expenditure for ROS in 2006 was €5,423,954.


€


€

Total Costs

€

Business Taxes 3,557,943 478,954 4,036,897

PAYE 842,057 545,000 1,387,057

Total 4,400,00012 1,023,954 5,423,954

Table 4.9: ROS Inputs




• Building;

• Testing;

• Live Support;




12 Figure rounded down from €4,477,597 to align with official outturn. The difference is accounted for by an invoice paid in 2006 in respect of work carried out in 2005.


4.10.5 Outputs The outputs of the ROS project in terms of software functionality for 2006 are described below.

Functionality Area End of year status

Annual Return of Income for self employed customers Business Taxes Delivered

Enhancement to Corporation Tax Return Business Taxes Delivered

Change to Employers PAYE Return Business Taxes Delivered

Change to Vehicle Registration Form Business Taxes Delivered

Annual Update to Intratstat Database Business Taxes Delivered

Change to employers copy of Tax Credit Certificates Business Taxes Delivered

Change to Employers PAYE Return Business Taxes Delivered

Suite of Services for PAYE employees PAYE Delivered in June

Annual Corporation Tax Return Business Taxes Delivered

Change to cater for revised letters issuing from ITP Business Taxes/ITP Delivered

Release of interface to ITP Business Taxes/ITP Delivered

Enhancements to Employers PAYE Return Business Taxes Delivered

Facilities for CGT payments Business Taxes/ITP Delivered

Printing facility for payslips Business Taxes Delivered

Upgrade of ROS site for Irish language and accessibility Business Site Delivered/Ongoing

Review and upgrade of FAQ's on the site Business Site Delivered

Facility to allow agents access employers copy of Tax Credit Certificate

Business Taxes Delivered

Improved quality of ROS emails to customers Business Taxes Delivered

New Services for filing of partnership returns Business Taxes Delivered

Change to cater for VRT on Hybrid cars Business Taxes Delivered

Annual update of ROS Forms and services Business Taxes & PAYE

Delivered

Ongoing bug fixes and enhancements Business Taxes & PAYE

Delivered

Testing of site to ensure non disturbance and optimal performance

Business Taxes & PAYE

Delivered

Review of ROS code to ensure optimal performance of site

Business Taxes Delivered

Table 4.10: ROS Outputs


4.10.6 Outcomes The benefits delivered by the 2006 enhancements of the ROS system were described by Revenue as follows:

• Decreased processing time: Queries from the public can now be dealt with more quickly and efficiently than the previous paper based system. Transaction times are reduced as a result of less processing of PAYE transactions;

• Increased use of self-service functions leading to fewer phone queries: Customers can now look up their PAYE history on time without the need to call a customer service operator. This represents a saving of resources, which can be moved from administration to compliance activities; and

• Reduced printing and postage costs: The ROS team has estimated the savings resulting from the reduction in document production, distribution costs and associated resource costs. These savings are illustrated in the table below.

Quantification of Benefits

The ROS team has quantified the benefits resulting from the new systems by estimating the time taken for personnel to carry out tasks and the cost of delivery and postage material. For 2006, Revenue estimated the figures as shown below 12:

Transaction Type

Total Returns

Resource Savings

€

Post/Fax Savings

€

Total Savings

€

VAT 353,013 270,643 338,892 609,535

P45 308,352 236,403 0 236,403

P30 265,727 203,724 255,098 458,822

P35 66,837 819,867 64,164 884,031

IT (Form 11) 300,055 1,874,844 797,186 2,672,030

CT 69,402 293,975 184,387 478,362

VRT Reg 217,759 667,794 217,759 885,553

VRT40 4,782 9,166 4,782 13,948

VRT Birth Cert 266,898 511,555 2,669 514,224

RCT 119,274 91,443 57,252 148,695

INTRASTAT 39,243 30,086 18,837 48,923

VIES 13,619 10,441 6,537 16,978

Transit 40,844 31,314 19,605 50,919

Payments 402,620 154,338 193,258 347,596

CIS Enquiries 6,037,511 6,943,138 14,715 6,957,853

Total Saving 14,323,872

Table 4.11: Quantification of ROS Benefits

12 Note: These savings are Revenue’s figures supplied by the ROS team


While it is not possible to attribute the annual savings directly to the 2006 activities, they do give a good indication of the overall efficiencies being achieved through the use of ROS. It should also be noted that considerable non-quantifiable benefits are being achieved by ROS customers. The number of people using ROS is increasing year on year. The ROS estimated benefits are illustrated below:

ROS Estimated Benefits 2004 - 2006 (€000)

6,460

10,560

14,320

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2004 2005 2006

Figure 4.8: ROS Estimated Benefits 2004-2006

The year on year benefits of ROS as estimated by Revenue show a steady increase in savings as a calculation of usage of the ROS services.

4.11 Other Items

4.11.1 Background and Overview Other Items refers to any expenditure within ICT that is not included in the above seven categories. This includes Management Information Framework (MIF) a framework for financial management and performance measurement, Tax Relief System (TRS), a system for calculating relief in respect of medical insurance premiums and mortgage interest relief, and the Customer Contact Project (CCP), a programme initiated to improve customer service capabilities through technology solutions, in particular for the PAYE taxpayer.

The MIF is a framework for financial management and performance measurement that provides Revenue management with an integrated view of financial and non-financial information to measure and improve performance.

The TRS system is a more efficient way of giving tax relief in respect of medical insurance premiums and mortgage interest relief. Subscribers get the correct relief in the form of reduced insurance premiums as the payments are made and borrowers will see the benefits of relief in the monthly mortgage repayment.

The CCP was initiated in late 2004 to apply quick-win technology solutions to improve Revenue’s Customer service capabilities, in particular for the PAYE taxpayer. The project is best described as an umbrella project, which complimented the PAYE redesign but was primarily focussed on better management of customer contacts regardless of the channel


used. The Integrated Contacts system (iC) is a related back-office system which had its functionality extended to address some key functional requirements of the CCP project.

4.11.2 Objectives of developments in 2006 Management Information Framework

The objectives of the developments in 2006 were:

• To further automate the information flow of required data into the MIF system and thereby substantially reduce manual input; and

• To make the system more user friendly by the provision of more immediate access to information and to enable the generation of required reports directly from the system.

Tax Relief at Source

The objectives of the developments in 2006 were:

• To automate and streamline the processing of refunds for prior year claims. The number of these claims is growing rapidly year-on-year and has increased by more than 85% from 24,426 claims in 2005 to 45,288 claims in 2006; and

• To improve the processing of the Monthly File Exchanges between Revenue and the main Lending Institutions by facilitating the immediate processing of the Lenders return files, as they are received by Revenue.

Customer Contact Project

• The main deliverables of CCP in 2006 was to provide multi-channel self-service access for PAYE customers. This was closely linked to developments in the PAYE online project but also extended to the IVR and SMS channels. The continued rollout of Voice Over IP (VOIP) telephony systems was also a key part of the project; and

• The Integrated Correspondence system was enhanced to support correspondence received via these channels.

4.11.3 Inputs The 2006 MIF developments resulted in an internal cost of €34,142 and external cost of €148,194. The 2006 TRS developments resulted in an internal cost of €35,238 and external cost of €313,632.

Over the course of the year, a number of Accenture resources were involved in the CCP project. These were mainly involved in the RIS and PAYE online developments, which addressed some of the CCP requirements. Additional expertise was required from Saadian technologies (SMS work), Planet21 (VOIP and IVR work) as well as Cisco (VOIP network). This work was subject to individual tenders and is accounted for separately.

The work associated with PAYE online has already been outlined in Section 4.5. As well as internal Revenue resources, the iC work required one full time external developer for the entire year. Additional external developers were required from time to time to undertake particular tasks related to interfaces and middleware changes. The total cost of the external resources in 2006 amounted to €295,874.



€


€

Total Costs

€

MIF 148,194 34,142 182,336

TRS 313,632 35,238 348,870

CCP 295,874 0 295,874

Miscellaneous 235,883 0 235,883

Total 993,583 69,380 1,062,963

Table 4.12: MIF, TRS, CCP, and Misc. inputs

4.11.4 Activities The main activities were program development of iC, in line with the overall CCP requirements. The application had to take account of the different channels and provide a single, consistent view of all customer contacts and requests. An amount of work was also required to ensure that the inbound messages were passed between systems and correctly responded to within agreed service levels.

Developments were made to the TRS and MIF systems in line with the annual business plan and customer requirements, and as illustrated by the outputs and outcomes below.

4.11.5 Outputs The main developments carried out within MIF were:

• The automatic feed of Income Tax and Corporation Tax system information into the MIF system;

• The automatic feed of ACM system information into the MIF system;

• The addition of Resource/Financial Hypercubes into MIF and the automatic feed of HRMS and eFinancials information into these hypercubes, by the provision of new Extract, Transform and Load (ETL) facilities; and

• The provision of Extract Tool enhancements and reporting facilities.

The main developments carried out within TRS were:

• The provision of an automated facility for the input, validation, processing of prior year claims, and the automatic calculation and creation of refund records for payment to TRS customers; and

• The provision of a more efficient procedure for the processing of monthly file returns from the main Lending Institutions.

The overall CCP project has had a major impact on Revenue’s Customer Service capabilities with a wide range of self-service options now available over multiple channels. The iC system continues to be further enhanced and expanded to include additional taxes, OCR and contact types.


4.11.6 Outcomes The benefits delivered by the 2006 enhancements are as follows:

MIF

• A substantial amount of information required by MIF has no longer to be manually entered into the MIF system thereby releasing resources to other work and improving the overall efficiency of the MIF system; and

• The ability to drilldown immediately to access required information on the system and the facility to generate required reports directly from the system, has greatly increased the use of the system and the overall effectiveness of the system.

TRS

• The TRS Refunds development enabled a more streamlined approach by electronically facilitating refunds; and

• Monthly file returns from the Lending Institutions can now be validated and processed much more quickly, thereby considerably improving the overall efficiency of the Monthly File Exchanges.

CCP

• The PAYE 1890 numbers have streamlined the phone service and through the use of IVR and SMS technologies, Revenue has positioned itself very well for continuous improvement of its Customer Service, including more self-service options. All of these transactions can be viewed through the iC system; and

• The iC system is now a critical application providing excellent workflow, management and statistics functionality to Revenue staff. This system has helped reduce handling times for correspondence, and enabled Revenue to achieve their required customer service levels.

4.12 Table showing projected and final expenditure outturn The differences between the projected and actual expenditure is accounted for by one or more of the following factors:

• Changing business requirements and priorities;

• Difficulty in estimating the requirement for external resources particularly for ground-breaking developments;

• New legislative requirements;

• Deferral or de-scoping of projects;

• Expansion of projects and re-scheduling of urgent development requirements;

• Decisions made in the context of competing priorities and administrative budget restrictions; and

• New Board and MAC priorities (e.g. P45, part 3 in ROS).


Area Initial ITEX Allocation at

end 2005* €

Projected figure in

July ITEX paper

€

Additional Funding

(Over original budget)

€

Year End

Total €

Variance (Against Mid-Year Revised

Funding) €

Variance %

Reason for Variances

ITS Business Taxes 4,400,000 5,309,956 909,956 5,444,422 134,516 3%

New business requirements

PAYE 7,200,000 7,204,914 4,914 7,072,578 -132,336 -2%Changed business priorities

Case Management 600,000 658,627 58,627 642,946 -15,681 -3%

Changed business priorities

Business Intelligence 850,000 524,608 -325,392 562,448 37,840 4%

Changed business priorities

Technical Architecture/

Standards 500,000 1,807,442 1,307,442 1,836,388 28,946 6%

The development was more complex than originally envisaged. Additional work was required on the interaction with Reach on brokering services.

Other Items 950,000 1,161,682 211,682 993,583 -168,099 -18%Changed business priorities

AEP 6,100,000 5,784,628 -315,372 6,046,613 261,985 4%The development was more complex than originally thought.

ROS 4,000,000 4,000,000 0 4,477,597 477,597 12%

In addition to new business requirements there was an invoice paid in 2006 in respect of work carried out in 2005.

Other (non ICT&L) 240,000 240,000 0 0 -240,000 -100%No requirement.

Total 24,840,000 26,691,857 1,851,857 27,076,575 384,768 2%

*For significant projects the ITEX approves funding on a phased basis and reviews the position mid-year in the light of actual versus estimated expenditure, and the overall administrative budget position. Following this review in July 2006, the ITEX approved an additional allocation of €1.851m.

Table 4.13: Projected and Final Expenditure Outturn


4.13 Alignment of Expenditure with Revenue’s Strategic Objectives

Project/Application area Revenue’s Strategic Objectives

Goal 1 Ensure Compliance

Goal 2 Capable, flexible, results-oriented

Goal 3 Play part nationally and internationally

Facilitate and encourage compliance

Confront and reduce evasion, avoidance, and

non-compliance

Develop our people

Improve our organisation

Enhance our capability through

technology

Play our part in government programmes

Play our part internationally

ITS Business Taxes

PAYE

Case Management


Technical Architecture/ Standards

Customs AEP


MIF

TRS

Table 4.14: Alignment External Resource Expenditure with Revenue’s Strategic Objectives


Our analysis shows a strong linkage between the external resources expenditure and Revenue’s strategic objectives around ‘ensuring compliance’ and ‘enhancing our capability through technology’. There are also significant contributions to ‘improve our organisation’ and ‘play our part nationally and internationally’. Compared to the other objectives there is less contribution to the goal ‘develop our people’ which is not surprising as this goal is primarily supported by non-ICT related initiatives and investments.

Some specific examples of the alignment of external resources expenditure with Revenue’s strategic objectives are as follows:

• ITS and ROS support a range of tax and duty types and various customer segments and their tax agents;

• The Customs AEP project met legal obligations and procedural requirements and enhanced Revenue’s collection, accounting, customer services and risk management capabilities. It also allowed management to re-engineer certain business processes; and

• Providing e-channels makes it easier for customers to interact with Revenue and for Revenue to do business with customers and their representatives. E-channels reduce manual intervention, free up resources and provide the foundation for proper Risk Analysis systems.

A more detailed analysis of the alignment of external resources expenditure with Revenue’s strategic objectives is contained in Appendix 6.


Section 5 Analysis of Expenditure

5.1 Overall External Resources Expenditure In 2006 Revenue spent €27.1m on external consultancy. The largest programme by expenditure was ITS, accounting for €16.6m. Customs AEP accounted for €6m and ROS €4.4m. This is illustrated below, along with expenditure for previous years and a projection for 2007.

2003

(€)

2004

(€)

2005

(€)

2006

(€)

2007

(€)

ITS Business Taxes

PAYE

Case Management



Other Items

6,830,000

12,740,000

13,400,000

16,552,365

17,860,000

ROS 5,250,000 5,130,000 5,030,000 4,400,00013 4,600,000

AEP N/A N/A 4,000,000 6,046,613 3,540,000

Total 12,080,000 17,870,000 22,430,000 27,076,575 26,000,00014

Table 5.1: ICT expenditure on External Resource by programme by year

The graph below illustrates the year on year expenditure for ICT External Resources. For the purposes of the graph below, all non-AEP, non-ROS programme expenditure incurred under the ITS contract has been grouped together and labelled as ITS.

ICT External Resource Expenditure by Programme by Year

€0

€5,000

€10,000

€15,000

€20,000

€25,000

€30,000

2003 2004 2005 2006 2007

Year

Exp

endi

ture

(000

)

AEP ITSROS Total

Figure 5.1: ICT external expenditure on external resource by programme by year 13 Figure rounded down from €4,477,597 to align with official outturn. The difference is accounted for by an invoice paid in 2006 in respect of work carried out in 2005 14 Budget for 2007 provided by Finance


5.1.1 Expenditure on Development and Maintenance Of the €27.1m spent on external consultancy in 2006, €6.3 million (23%) was spent on maintenance activities to ensure continued service of existing applications, and €20.7 million (77%) was spent on the enhancement of the application portfolio and new releases.

2006 Expenditure (€)

Maintenance 6,316,075

Development 20,760,500

Total 27,076,575

Table 5.2: ICT external expenditure – development/maintenance analysis

5.2 ITS Expenditure The table below illustrates the external resources expenditure on ITS projects for 2006. This includes all non ROS and AEP projects.

Area Maintenance

(€)

Development

(€)

Total amount

(€)

Accruals and Prepayments 0 3,872,578 3,872,578

ITS Business Taxes 0 1,500,000 1,500,000

Live Support 3,944,422 0 3,944,422

Total ITS Business taxes 3,944,422 1,500,000 5,444,422

PAYE Stabilisation 0 1,100,000 1,100,000

New Developments 0 2,100,000 2,100,000

Total PAYE 3,200,000 3,200,000

Case Management (AIM/ACM/PCM) 96,442 546,504 642,946

CIF (incl. RABI) 104,152 416,608 520,760

IBI 12,506 29,182 41,688

Business Intelligence Total 116,658 445,790 562,448

RIS 100,000 1,010,181 1,110,181

ITIL/TA Support 0 726,207 726,207

Technical Architecture/Standards Total 100,000 1,736,388 1,836,388

MIF 0 148,194 148,194

CCP 0 295,874 295,874

TRS 175,634 137,998 313,632

Misc. 0 235,883 235,883

Other Items Total 175,634 817,949 993,583

Total 4,433,156 12,119,209 16,552,365

Table 5.3: ITS expenditure on external resource


Total expenditure on ITS in 2006 was €16.5m. Maintenance in 2006 accounted for €4.4m (27%) of expenditure; development accounted for €12.1m (73%). The largest expenditure areas were ITS Business Taxes and PAYE.

5.3 ROS Expenditure Details of the external resources expenditure for development and maintenance activities on the ROS project from 2003 to 2007 (estimated) are shown below. The expenditure on ROS has been steady over the past number of years. It was reduced in 2006 from €5m to €4.4m. This reflects the growing maturity of the ROS applications as most Revenue customer facing products are now online. The budget for 2007 is less than the expenditure in 2006.

ROS Expenditure

2003

(€)

2004

(€)

2005

(€)

2006

(€)

200715

(€)

Maintenance 2,168,250 2,308,500 1,901,340 1,848,000 2,300,000

Development 3,081,750 2,821,500 3,128,660 2,552,000 2,300,000

Total 5,250,000 5,130,000 5,030,000 4,400,00013 4,600,000

Table 5.4: ROS external expenditure on external resource for development and maintenance

5.4 Customs AEP Expenditure The development costs for AEP for 2005, 2006, and 2007 (estimated) are shown below.

2005

(€)

2006

(€)

200715

(€)

Development 4,000,000 6,046,613 3,540,000

Total 4,000,000 6,046,613 3,540,000

Table 5.5: AEP external expenditure on external resource

As the new Customs AEP system went live in June 2007, projected development costs have significantly reduced in 2007. The figure of €3,540,000 includes the cost of the extension to the fixed price contract agreed in 2006 plus the activities carried out to integrate the new application to the ITS environment. Ongoing maintenance of the Customs AEP systems will be included in the overall ITS budget and plans, although detailed estimates have not yet been developed for this.

5.5 Comparative Analysis of Expenditure Possible Comparators

This section of the report provides comparative information from other organisations, both public and private sector. The sources of information presented in this section are as follows:

• Revenue: interviews, Annual Report 2006, other published documents;

• Bank of Ireland: interview;

• New Zealand Inland Revenue, Singapore Revenue, Denmark Revenue: telephone interview; and

• Deloitte Research.

15 Source: Finance budget forecast


The cost of administration of revenue collection is an important metric. The table below shows the cost of administration for 2006 as a percentage of net Revenues collected. From this we see that Revenue Ireland is in line with the other Revenue authorities listed.

Organisation Revenues Collected (€000)

Cost of Administration

(€000)

Cost of Administration

as a % of Revenue

Denmark 107,232,663 634,401 0.59%

Revenue Ireland 45,536,000 416,500 0.91%

Singapore 9,687,000 88,630 0.91%

New Zealand 26,415,000 251,957 0.95%

United Kingdom 599,254,000 6,435,526 1.07%

Table 5.6: Total Cost of Administration as a % of Revenue Collected

It should be noted in the table above that New Zealand Inland Revenue and the Inland Revenue Authority of Singapore do not operate the Customs functions for those countries.

The total IT expenditure per employee is another measure, although it should be noted that direct comparison of costs per employee is difficult due to the different market environments each organisation operates in. Local factors such as labour rates and market competition directly influence these figures. Table 5.7 below compares the total IT expenditure per employee in Revenue with corresponding figures for other international Revenue authorities, for other Irish public sector bodies, and the Bank of Ireland for 2006.

Organisation Total IT Spend (€)

Headcount Total IT Spend per Employee (€)

New Zealand 25,400,000 5,300 4,792

United Kingdom 750,474,000 89,251 8,409

Denmark 93,981,300 8,945 10,507

Revenue Ireland 78,170,000 6,500 12,026

Department of Social and Family Affairs (DSFA) 76,560,356 4,800 15,950

Singapore 36,367,218 1,494 24,342

Bank of Ireland 420,000,000 16,500 25,455

Table 5.7: Total IT Spend per employee

It is important to note that while these kind of comparators provide a useful indication of where an organisation is on a possible spectrum of investment levels, they cannot in and of themselves indicate whether value for money is being achieved. Every organisation must look at its own business cases for investment.

The comparisons provided in this section indicate that Revenue is within expected norms for an organisation that is a high user of ICT.


Section 6 Cross Programme Findings and Recommendations

6.1 Introduction The terms of reference for this study require commentary on the efficiency with which objectives have been met and an examination of alternative approaches to achieving these objectives in a more efficient and/or more effective basis.

Effectiveness and efficiency in achieving objectives is in turn dependent on a number of factors including:

• Business Case and Benefits Realisation;

• Procurement of External Resources;

• Quality and Risk Management;

• Internal Resources Team and Skills;

• Governance;

• Project, Programme, & Portfolio Management, and PMO;

• Utilisation of External Resources;

• Performance Management Framework; and

• Putting Value at the centre of all ICT investment.

6.2 Business Case and Benefits Realisation Expenditure on external resources must be aligned to objectives and business benefits. All proposed costs should be fully understood and documented. Alternative means of achieving objectives should be considered. Expected tangible and intangible benefits should be documented and tangible benefits should be quantified where possible. Actual achievement of benefits should be explicitly tracked and monitored.

6.2.1 Assessment – Business Case and Benefits Realisation As set out in Sections 3 – 5, there were strong overall business cases for the external resources expenditures examined in this report.

The majority of the expenditure was driven by legislative requirements and maintenance needs (as would be typically required of any major ICT system). The benefits and objectives for most of the projects and programmes were primarily non-quantifiable.

There was evidence from stakeholder interviews that the objectives and costs for each project were well understood by senior management and were documented in various project documentation, although this varied by project.

While it can be difficult to develop business cases for projects that are driven by legislative and maintenance requirements, Revenue is addressing this with a new comprehensive business case process that was piloted in 2006. The new business case process will be used for all future investments over €250,000. A simplified business case process, commensure with the scale and costs of smaller projects, will be developed by the Programme Management Office in 2008.

No formal benefits realisation programmes were in place during the period under review, and the benefits based on project objectives were generally not monitored and reported on. The exception was ROS, which has good statistics on benefits being achieved in certain areas. Revenue has commenced a benefits realisation process in respect of a small project which was completed in 2007, and plans to extend this process to all other major ICT projects in 2008.


Recommendation 1 – Business Case Process

We recommend the full implementation of the new formal business case process. Any future material changes to existing programmes should be re-run through the business case process. The new Programme Management Office should support and monitor this process.

Recommendation 2 – Benefits Realisation

We recommend the full implementation of a formal benefits realisation process to track and monitor actual achievement of benefits. Responsibility for benefits realisation should remain with business line management. The planned PMO should be tasked with assisting line management in tracking, monitoring and achieving benefits.

6.3 Procurement of External Resources Good procurement practices are very important to ensure maximum value for money is achieved from expenditure on external resources.

6.3.1 Assessment – Procurement of External Resources During the period under evaluation, external resources were procured under three existing separate contracts. A brief description of each contract is provided below.

ITS

The contract to provide external resources for the development of Integrated Taxation Systems was originally awarded to Accenture in 1999, following a competitive tendering process under public procurement guidelines. The contract was re-tendered in two lots in 2003. Two responses were received for Lot 1, which required knowledge of taxation frameworks. Four responses were received for Lot 2, which required relevant IT skills, but only two were deemed to have met minimum requirements. Revenue received advice from Gartner and An Garda Síochána on the evaluation process. Gartner was involved in the evaluation of the tenders received. A representative from An Garda Síochána reviewed the tendering process and judged it to be open and equitable. Following the evaluation, both contracts were awarded to Accenture.

The contract was based on a time and materials model, and while no end date was specified, several references to “each of the first three years” suggest that it was written with a three-year view. This contract is in the process of being replaced as part of a major procurement exercise. Four Requests for Tenders were issued in 2007. Contracts have been awarded to an alternative provider for a wide range of ICT services including technical architecture support, ICT standards and certification, quality assurance and testing. The second phase of this procurement exercise relating to external ICT development resources will be completed in the first quarter of 2008.

A discount of 19.5% was negotiated by Revenue on half of the fees for Lot 1 services and all of the fees for Lot 2 services, based on specified minimum resource levels (at least 6,480 man-days for each of the first three years of the contract). This discount was also dependent on a pre-paid model in which fees for the maintenance team (14 resources) were paid annually in advance.

The scope of services was described within Schedule A of the contract as follows:


“Accenture shall provide services for the continued development of the Revenue Commissioners’ Integrated Taxation Services which includes ITS solutions and any other related components as the Revenue Commissioners may specify, as well as any additional tasks identified and agreed between the parties from time to time.”

Examples of additional work carried out under the terms of the contract include support of the ITIL rollout and training of Revenue resources.

ROS

The contract to provide external resources for the development of ROS was awarded to Accenture in 1999, following a competitive tendering process under the public procurement guidelines.

Since then, the contract has been extended on an annual basis. While the contract should have been re-tendered after three years, this did not happen as a result of pressure to meet project deadlines. Revenue now has a plan to go to tender for external resources to provide continued support for ROS. It is intended that a new contract will be put in place as part of the developing procurement strategy by late 2007/early 2008.

The existing contract, which covered the review period of 2006, is based on a time and materials model, and uses a composite rate. This rate has been static for three years, and is lower than the rate four years ago as a result of active negotiation on Revenue’s side. This rate applies to all work carried out by Accenture under the ROS contract and is subject to annual review. All expenses are included within the composite rate.

The schedule of developments to be completed under the terms of the contract is determined on an annual basis. This is documented and forms the official agreement between Accenture and ROS for the year.

Customs AEP

The Customs AEP contract was awarded to Accenture in 2005 following a competitive tendering process. Three responses to the Request for Tender were evaluated in detail. Accenture’s proposal was the only one that met all the mandatory requirements. The scope of the contract included Product Customisation, Integration, Testing, Training, and Project Management services. The Fixed Price contract was valued at €5.9m. The Customs AEP contract was extended by €247,800 (excluding VAT) in October 2006.

Contract management

The three contracts within the scope of this evaluation were managed locally by the individual projects.

Contract management activities took place between the Revenue project managers and Accenture managers. For all projects, meetings took place regularly (several times each week), to review the progress of various projects against plans. Financial reconciliation processes were conducted every quarter during 2006. The function of such an exercise was to reconcile costs (based on pre-paid amounts and projections as described above) and actuals (based on reports generated from automated time keeping system). The contract allows for an annual review of Accenture’s rates. In addition to these project meetings a formal, weekly meeting took place between the Director of ICT and the Accenture lead partner, for activities in Revenue, to review progress and issues across all programmes/projects.


For the ROS contract, the schedule of deliverables and rates are agreed and documented annually for the year ahead.

6.3.2 Continuing developments in procurement Revenue has identified sourcing as an area of significant change within its ICT Strategy 2006-2008. Consideration will be given to the following factors:

• Volume of work carried out by external resources;

• Cost of work carried out by external resources;

• Experience of in-house teams;

• Number of suitable suppliers on the market;

• Impact of decentralisation on ICT resources; and

• Government policy, such as potential introduction of shared services.

The strategy also identifies key requirements for Revenue as follows:

• Maintain control of strategy and architecture;

• Ensure enough knowledge to maintain applications in-house, including a transfer of skills for systems such as ROS; and

• Devise an approach for new developments whereby multiple vendors can co-exist and compete, with continued Revenue oversight and the involvement where practical of in-house managers and developers.

It recommends that these requirements are best met by a “judicious blend of in-house resources and multiple external sources”, and specifically identifies the following areas as being suitable for separate tenders for fixed price, fixed term contracts:

• ITS framework support;

• ITS development;

• Specific computer technologies and languages, both existing and under consideration, for example in systems such as Revenue Case Management;

• ROS development and maintenance;

• ITIL implementation and Computer Centre Technical Support; and

• Business Intelligence and Analytics.

It also recognises that different engagement models are appropriate for different types of services, from utility-type development and maintenance to strategic transformation support. This following diagram is extracted from the ICT Strategy 2006-2008.


Figure 6.1: Revenue Engagement Model

6.3.3 Summary – Procurement of External Resources As long as Revenue continues to invest in major ICT programmes, it is likely to need external resources to deliver its objectives.

Revenue has recognised that it has become heavily dependent on a prime contractor for the provision of external resources over the past several years (c.f. ICT Strategy 2006-2008). Plans are in place to pursue a multi-sourcing strategy in the future. All external resources will be re-tendered on a regular basis as recently evidenced by the appointment of an alternative supplier in 2007.

Recommendation 3 – Procurement of External Resources

• We recommend that Revenue continue to develop and implement its multi-sourcing strategy. This should include a comprehensive sourcing strategy for external ICT resources which takes account of the integrated nature of the Revenue systems. Revenue should focus on developing a small number of strategic suppliers who have the capability and scale to support the core integrated systems. It is recognised that for certain projects requiring deep technical skills, there is a limited number of suppliers with the required skills in the market;

• Expenditure on external resources should be analysed and categorised based on service characteristics (e.g. New Projects, Maintenance, Infrastructural, Quality Assurance). Where appropriate, consideration should be given to the appointment of multiple suppliers to each category to facilitate future competition and drive further cost savings/value for money;

• The completion of the major integration programmes should give Revenue the opportunity to consider smaller work lots than heretofore for upcoming developments such as Revenue Case Management. Where possible, work lots should be manageable pieces of tightly related activities that can be associated with identifiable deliverables;

• Contracts should be re-tendered and renewed regularly, no less frequently than every three to four years; and

• More extensive use should be made of Fixed Price lots of work in particular for New Projects and Maintenance Work.


6.4 Quality and Risk Management

6.4.1 Quality Management

Quality planning is concerned with establishing policies and standards for the project. The output is a quality management plan, which describes organisational structures, responsibilities, procedures, processes, and resources needed to implement quality management.

Quality assurance processes are mainly concerned with planning and executing specific tests for known results. The “V” model for software quality assurance, as illustrated below, is widely used, and provides guidance on the timing of test planning and execution activities. Quality assurance activities are also relevant to all other project outputs, including specification documents, training manuals, etc.

1 ORT stands for Operational Readiness Testing and includes performance, conversion and non-functional testing.

2 UAT stands for User Acceptance Testing

Development

Analysis

User Acceptance Test Specifications

Design

System Integration Test Specifications

Unit Test Specifications

System & Integration Testing

BusinessRequirements

System Design Functional

Requirements

Unit Design Detailed TechRequirements

Operation/ Maintenance

ORT1/UAT2

Unit Testing

Coding/ Debugging

Requirements Definition

Development

Analysis


Design






Requirements



ORT1/UAT2

Unit Testing

Coding/ Debugging


Figure 6.2: Quality Assurance Overview

The PMBOK processes for Quality Management are described in Appendix 1. The key processes, Quality Planning, Quality Assurance, and Quality Control provide a structure for the evaluation in this section.

6.4.2 Assessment In general, quality across the projects has been good. This is evidenced by the successful implementation of many projects and the proven usability of the live applications.

Quality assurance was in place for all programmes. All programmes described detailed code-level quality assurance procedures, in the form of code walkthroughs and/or peer reviews. There were formal processes in place for unit, system and user acceptance testing.


A formal overall quality policy did not exist for Revenue or for Revenue IT projects during the period of the review. Informal quality policies existed at project level, though these were not documented. Project stakeholders were not always made fully aware of the quality policies that existed.

Software development standards for the ITS and ROS platforms have evolved over time and were generally used consistently though not always documented. For the AEP eBiscus project, development and test standards were monitored directly by Revenue staff using their quality assurance and user acceptance testing processes.

The QA activities that were carried out led to improved quality software from development to test, and eventually onto production.

In the case of the PAYE project there were significant issues due to a combination of the quality of certain data from the old PAYE system and tighter business rules in the new on-line system. This required a stabilisation process to be put in place before the new system operated satisfactorily in the live environment for specific cases.

A dedicated quality assurance team was piloted on the AEP project, and the Review team believes that this has significantly improved the quality of the software integrating eBiscus to other ITS applications.

Based on the experience of AEP, Revenue has put in place a dedicated QA and Testing function. It is intended to bring independence and increased rigour to testing of all critical applications. This has been co-sourced with an external supplier.

6.4.3 Risk Management Risk management is the systematic process of identifying, analysing, and responding to project risk. It includes maximising the probability and consequences of positive events and minimising the probability and consequences of adverse events to project objectives. Details of PMBOK inputs, tools, and techniques are provided in Appendix 1. The key processes are used to provide a structure for this section of the evaluation.

6.4.4 Assessment – Risk Management There is clear evidence that risks were identified and managed using a repeatable process at 3 distinct levels:

• Corporate Level risks, monitored by the Strategic Planning Division using Revenue’s CRMS (Corporate Risk Management System);

• Programme Level risks monitored by Project Boards, ITEX and Divisional Management; and

• Project Level Risks (see below).

At a detailed project level, the risk log for the ROS project was provided as an example. This provides the following classifications for all risks:

• Status (open, realised, retired, closed);

• Category (cost, schedule, technological, operations, external);

• Area of impact (live environment, release environment, technical architecture);

• Severity of impact (very high, .. , very low);

• Probability of occurrence (very high, .. , very low);


• Level of control (no control, .. , total direct control);

• Type of mitigation (immediate, contingency, none); and

• Action type (avoidance, control, acceptance, transfer, investigation).

Generally risks were identified, documented, and managed across all projects although the process was not standardised and varied from project to project.

The ROS risk register provides details of the risk response planning within the ROS project. It specifies the actions required for each risk, and identifies the individual responsible and the timeframe. The project managers for the other projects described a similar process.

All of the risk analysis that was carried out on the projects under review was qualitative in nature. The level of detail provided in the ROS risk register shows that this was done in a detailed manner.

Various tools were used for communication of the status of risks, including project board meetings notes, risk registers, and memos. In general, formal risk audits were not carried out, although the PAYE project review included risk management within its terms of reference. Risks were monitored on an ongoing basis through the project boards, ITEX and MAC meetings.

Recommendation 4 – Quality and Risk Management

We recommend the rapid roll-out of the new Quality Assurance and Testing function, which has already been piloted. This new function should focus on making QA more formalised and establish repeatable methods, to include data testing strategies for major data conversion programmes. Revenue should develop QA and Testing skills in enough resources to ensure that this function can be staffed appropriately and continuously. This function should continue to be supported in the interim by the use of external, professional resources to ensure capability and momentum is maintained.

6.5 Internal Resource Team and Skills Management In order to ensure that value is being achieved from expenditure on external resources it is first important to ensure that the optimal mix of internal resources and skills are in place. Otherwise external resources may be used for tasks and functions that could be more appropriately and more cost effectively carried out by internal staff.

Clearly not all tasks could or should be carried out by internal staff, but having a highly skilled internal team plays a vital part in driving value for money when using external resources.

During 2006, approximately €27.1m was spent on external resources in IT, compared to €19.3m on internal resources. All areas reviewed used a mix of internal and external resources. The resource utilisation in each key area is described below.

ITS Application areas

The work carried out under the ITS contract was done by a pool of resources which moved across the various application areas as required. In general, project management, functional, and technical specification activities were carried out by Revenue resources, with development, unit testing, and some system testing done by Accenture. Some project


management was provided by Accenture where a suitable Revenue resource was not available.

Revenue is actively trying to address the internal staff shortage issues by recruiting graduates at Administrative Officer (AO) level. External opportunities and the uncertainty around decentralisation are contributing to staff retention issues.

ROS

As well as technical skills, the Accenture team brought experience of similar implementations, which could not have been found internally. Accenture has been supporting the ROS applications since 1999, and in that time has developed both a strong relationship with Revenue and in-depth business knowledge. Accenture resources were involved in all activities, including project management, technical and functional specification, and testing, for both new developments and ongoing maintenance.

Customs AEP

The eBiscus and ESKORT developments were carried out entirely by external resources. This work was completed offshore by Bull under Accenture’s management. Revenue provided the technical and functional specifications. Revenue was directly involved with Bull in matters concerning software licensing and software configuration. A mix of Revenue and Accenture resources was used for the integration of the new AEP solution with ITS platform. This was driven primarily by a lack of internal capacity, rather than a lack of internal skills.

6.5.1 Assessment – Resource and Skills Management While acknowledging the need for external resources to support large-scale ICT implementations, Revenue is also experiencing skills shortages in a number of areas, including the technical, functional and project management skills necessary to deliver these programmes. Effective resource management is therefore especially important to improve skill levels in these areas, and to increase overall resource retention levels. Revenue has commenced its scheduled programme of recruitment of additional technical skills to help reduce the need for external resources.

In order to determine the optimal mix of internal vs. external resources it is necessary to consider the following factors:

• Some functions must be carried out by internal Revenue staff;

• Some functions are probably best carried out by external resources – e.g. proprietary technical skills and skills which are overly expensive or impossible to develop and retain in-house; and

• Some functions could be carried out either by internal staff or external resources depending on factors such as quality, risks, costs, time etc.

Revenue’s plans to develop more in-house technical skills should result in reduced external resource costs. Care will need to be taken to ensure that large and potentially long term costs are not taken on board which would reduce the expected savings.

The following key processes are important from an IT resource management perspective:

• Design and evolve IT HR strategy;

• Manage resource allocation and capacity;

• Manage career, training and development;


• Manage succession; and

• Putting value creation and management at the centre of how internal staff are managed and motivated.

As Revenue moves towards a multi-vendor environment it will become even more important to have suitable internal skills to support programme leadership and drive value for money. Revenue has a small number of highly experienced project managers. However if Revenue is to properly manage a multi-vendor environment it will need to significantly increase its capacity, by expanding the number of managers with strong project management skills.

Recommendation 5 – Internal Resources Team and Skills

Revenue should focus on increasing its Project and Programme Management capacity, by training more resources in skills including business case development, business analysis, benefits realisation, change management, quality assurance, Value for Money reviews, strategy development, and application and technical architecture. This initiative should also supplement existing procurement and contract management skills to support its new multi-sourcing strategy.

Revenue should also continue to develop its IT Human Resources strategy focussing on training, career development and succession planning.

6.6 Governance Governance is central to ensuring efficiency in achieving objectives. Good governance enables effective programme leadership by providing structures and processes for controlling and monitoring the progress of individual projects. Poor governance can lead to programmes that are ineffective and wasteful, even if the external resources suppliers are providing their services fully in compliance with their contracts.

6.6.1 Assessment – Governance Revenue had strong governance in place during 2006 and this was a critical success factor in the delivery of projects. Each programme had a project board chaired by an Assistant Secretary and there was generally good representation from IT and business areas. Comprehensive communications were in place.

Revenue’s Annual Report 2006 describes components of the governance structures, including the Board of the Revenue Commissioners and the Management Advisory Committee (MAC).

Further organisational structures that support programme governance are16:

• The IT Executive Committee (ITEX) which is a sub-committee of the MAC. Its role is to develop Revenue’s Information and Communications Technology strategy, to recommend significant ICT projects and to oversee their implementation; and

• Project Boards which report to the MAC or ITEX. Boards are chaired by an Assistant Secretary from a business division or region. Representatives are drawn, typically at Principal level, from the business areas involved in the project and normally from ICT&L Division. Boards are created and disbanded as the projects or programmes are initiated or disbanded.

16 ICT Strategy 2006-2008


This is illustrated below:

ICT&L Division

Active at end 2006 Key: Disbanded at end 2006

Figure 6.3: ICT Governance Structure

In a review of Governance carried out during 2005, Revenue identified a number of areas where further improvements could be made:

• Ongoing review of the size of Project Boards;

• Continuous focus on accountability of Project Board members for decisions; and

• Further improvements and standardisation of documentation – business cases, project status updates etc.

As part of this evaluation we examined Governance under the COBIT17 framework.

COBIT Domain 1: Planning and Organisation

This covers the initial activities and structures that should be put in place to provide a framework for effective management of programmes. It includes ICT strategy for architecture, organisation, communication, project and quality management, and compliance.

Revenue’s ICT Strategy 2006-2008 was in place for the year of the review (2006). This defined the technical direction for Revenue and aligned this with the overall Revenue statement of strategy. The IT organisation is well established with a strong focus on governance.

COBIT Domain 2: Acquisition and Implementation

This covers the identification of solutions and the acquisition and installation of application software and associated technical architecture. It also includes development and maintenance of process changes.

There were no major software acquisitions in 2006 as the projects within the scope of this evaluation were all identified and started in previous years.

17 Control Objectives for Information and related Technology (CobiT) is the IT Governance Institute’s framework for the management and delivery of high-quality information technology-based services.


COBIT Domain 3: Monitoring

This includes adherence to standards and processes, and independent quality assurance and audit.

Monitoring occurred on all projects reviewed but was not consistently applied. The AEP project was used to pilot a new set of consistent monitoring tools and it is intended to roll these out to subsequent projects.

COBIT Domain 4: Delivery and Support

This covers management practices for both internal and third party resources, including service levels and performance management. It also covers service delivery to end users.

Third party resources were formally managed and subject to periodic reviews. Resource requirements were estimated based on previous year’s effort and taking into account requirements of new programmes/projects.

Recommendation 6 – Governance

• We recommend that Revenue continue to make the improvements identified in the Governance review carried out in 2005;

• Project board members should be provided with appropriate training to support the fulfillment of their responsibilities; and

• Plans to standardise monitoring and reporting across all projects should be rolled out as quickly as possible.

6.7 Project, Programme, and Portfolio Management Good project and programme management is essential for ensuring that objectives are achieved as efficiently as possible. Poor project management will inevitably lead to wasted effort and could lead to major project failures. Ensuring value for money is achieved for external resources expenditure requires tight project management and deep skills in these areas.

6.7.1 Assessment – Project Management Project management was strong for the projects reviewed as evidenced by the number of projects successfully implemented. These are outlined in Sections 4 and 5. Documentation was largely good, though there was some lack of standardisation. In the case of PAYE, a number of issues relating to timely allocation of business and testing resources and sign-off on business requirements arose in 2004 and 2005. The lessons learnt from this are being addressed through more rigorous project management controls.

Revenue uses Revenue Development Methodology (RDM) – its own methodology, which is based on elements of the development methodology used by its main supplier and augmented by Revenue specific material. In the past Revenue used elements of the PRINCE2 methodology and some of these are still in use to some extent today – e.g. governance structures. Revenue plans to further roll out elements of PRINCE2 to meet its future needs.

High level planning of projects was good. Functional and technical specifications were in the main well understood during the project lifecycle. Likewise estimates were generally considered to be reasonably good, though it was acknowledged that they could be improved in certain areas.


The overall process for starting up a project in the period under review was well understood and structured, but informal. Revenue now requires all projects to have a Project Initiation Document (PID) in place for presentation to the ITEX committee for project approval.

Projects were managed using a variety of valid but sometimes differing approaches. Revenue are standardising all projects on RDM to drive further consistency and structure for project management methods and tools.

Senior project managers were responsible for management and escalation of issues to the project board where appropriate.

Quality Assurance activities took place through all phases (peer reviews of code, etc.), and has been dealt with in Section 6.4.

Project closure is currently not supported by a formal process.

As Revenue moves towards a more complex multi-vendor environment, project accounting policies, processes and tools will be reviewed and considered for future implementation. The Earned Value method will be used for future reporting on projects and internal resources will be included in project costs. This will provide the information required to manage project performance and develop full business cases for projects.

Recommendation 7 – Project Management

• Revenue should continue the rollout of a standard development methodology such as RDM (or similar);

• Revenue should continue the move towards greater use of PRINCE2, in particular for initiation, timely resourcing, controlling and project closure;

• A history of estimates vs. actuals of agreed prices and work delivered should be developed and used to develop internal skills in this area. This will be essential as the environment moves towards greater use of outsourcing in certain development areas; and

• To ensure that a consolidated view of all expenditure associated with each programme is available, project accounting policies, processes and tools should be examined and considered for future use.

6.7.2 Programme & Portfolio Management, and PMO A programme represents a multi-project initiative, where typically several interdependent projects are managed concurrently with common or complementary objectives. Programme Management represents the set of processes and activities to support the joined-up delivery of all the projects in a way that is aligned with the overall objectives of the programme.

Portfolio Management provides a further dimension of management which ensures a line of sight is maintained between all the initiatives (projects and/or programmes) being executed by the organisation and the strategic relevance and rationale for doing them. Portfolio Management also allows organisations to align and actively plan and target resources where the most benefit for the organisation can be achieved.

A Programme Management Office (PMO) can provide a mechanism for improving cross programme reporting and act as a repository for standardised tools and processes.


6.7.3 Assessment – Programme & Portfolio Management, and PMO

During the period of this evaluation, Revenue delivered eight major programmes of work. Each of these programmes consisted of several sub-projects. Some of the individual projects and programmes involved multi-million euro investments.

While some of projects were standalone, others shared a significant amount of interdependency, from a technical and business perspective. For example, the implementation of AEP, required changes to the main ITP platform, CRS, RIS and ROS for internet access. Resources were often swapped between the various projects.

As Revenue goes forward, the integrated nature of the computer systems and business processes means that future projects will require increasing coordination. The challenge for Revenue will be to introduce further standardisation of tools, templates, processes etc without greatly increasing the management overhead or introducing too much bureaucracy.

Revenue plans to introduce a Programme Management Office to support its IT projects. The objectives of the PMO include the following:

• Serve as a reporting conduit to MAC/ITEX from a programme co-ordination perspective;

• Provide an independent voice to project boards on project management and quality of their plans and products;

• Act as a corporate repository for information on project management, tools, knowledge and standards; and

• Primarily address major ICT programmes and projects, but its remit could equally address non-ICT projects.

Other planned functions of the PMO are:

• Provide project management guidance to new project managers;

• Be a source of internal consulting and mentoring on project management best practice;

• Act as a resource pool to provide proactive and reactive assistance as requested by MAC/ITEX and Project Boards; and

• Work with the business and ICT to evolve project management templates and materials - with reference to existing metrics, testing and development standards.

The PMO is planned to be implemented in an incremental way. Initially it will be focused on ICT programmes and report into ICT&L. Over time it is planned that the PMO will evolve to cover non-ICT programmes. While the PMO has been approved in principle it has not yet been rolled out.

Recommendation 8 – Programme Management Office

• We recommend that Revenue roll out the proposed PMO as quickly as possible given the major ICT programmes underway;

• Consideration should be given to including business case development and benefits realisation support in the functions of the PMO. Portfolio management techniques should also be considered for inclusion as soon as this is practical;

• As Revenue increasingly moves to multiple vendors for external resources – support for procurement and vendor management could also be considered for inclusion in the PMO; and

• Portfolio management could provide an important tool to help senior management gain visibility of value issues across the entire set of projects and programmes.


6.8 Utilisation of External Resources As outlined in Section 6.5, there is scope to build up internal skills and replace external resources expenditure in certain areas. However care must be taken to build up the right kind of skills. In some ways, project and business analysis skills are even more important than technical skills, as it can be argued that lower level technical skills can be a commodity easily purchased from outside.

A key element of Revenue’s strategy in relation to the development of internal ICT capacity is to grow back the architecture and technical designer layer which was eroded over the last decade, through promotion and loss of experienced staff, and compounded by difficulties in the recruitment and retention of IT specialists across the public service. Revenue has started to address this issue largely through the recruitment of administrative officers and graduates to ensure that it retains control of its ICT strategy and architecture. The ongoing implementation of Revenue’s IT HR policy focussing on training, career development and succession planning for this core layer of in-house specialists, will ensure that Revenue retains control of its ICT portfolio.

Moving to a multi-vendor environment introduces increased competition for work and is the only way to continually ensure that the best value for money is being achieved for external resources expenditure. The challenge is to successfully move to a multi-vendor environment, without taking on undue risks to quality or project delivery.

There are many vendors that specialise in different aspects of supporting a modern ICT environment. These range from individual contractors to global Systems Integrators and from advisory firms to specialist and niche suppliers of services. Though Revenue’s strategy of building up internal capacity in mission-critical areas is fully accepted, Revenue might find it cost effective to outsource more of certain types of work particularly in non-core areas.

Recommendation 9 – Utilisation of External Resources

• Revenues mission-critical objectives warrant the levels of expenditure on external resources on a current and continuing basis;

• Revenue should continue the strategy of growing back its in-house skills particularly in the architecture and technical design layer and must ensure it retains control of its ICT strategy and architecture. Revenue should also prioritise the development of management and business analysis skills (business analysis/business case, benefits realisation, change management, procurement, vendor management, value for money and QA); and

• As part of its new multi-sourcing approach, Revenue should use different types of external resource models and consider the range of options available from individual contractors to global system integrators. It should not restrict itself to two or three suppliers that are similar in scale to the existing major supplier. It is however, recognised that there are limited market possibilities for some deep technical skills.


6.9 Performance Management and Key Performance Indicators

Performance Measurement gauges the effectiveness or efficiency of a process. This is useful for decision making and for assessing the overall outcomes of an investment. Key performance indicators (KPIs) form an important part of the overall Performance Management approach.

Good KPIs should meet the following criteria:

• Process Dependent - KPIs should be derived from or be the outcome of specific processes to ensure that they can be easily obtained and tracked;

• Reliable - The data used for the KPIs should not be arbitrarily derived and should reflect accurate information;

• Quantifiable - KPIs should be measurable and easily expressed in relevant units;

• Ongoing and Comparable - Rather than being “one-time” indicators of performance, KPIs should provide useful information on an on-going basis; and

• Linked to Objectives - KPIs should provide information that can be linked to the appropriate objective(s).

To deliver value, expenditure must be linked to outcomes and progress must be measured against business objectives. In order to manage performance, organisations should use tools such as a balanced scorecard to track progress against key objectives.

6.9.1 Assessment – Performance Management and KPIs For the purpose of this evaluation, performance management was considered in the context of contracts (for external resources), project management, and operational management.

Contract Performance Management

The performance of the external resources was reviewed regularly, in terms of cost, time, and quality. Cost was generally assessed in terms of hours worked, time in terms of elapsed time and target delivery dates. Quality was assessed qualitatively by the project manager.

Project Performance Management

Project status reports were generally used to assess project progress and drive management decisions. In addition, earned value was used as a metric on the Customs AEP project. This was implemented in a very detailed way and therefore provided an accurate measure of progress against baselines. Revenue intends to roll out the use of the earned value method across all other appropriate areas.

Quality of deliverables was also used to assess performance. This was based primarily on the assessment of the project manager, rather than quantification against a pre-defined baseline and target.

Operational Metrics

Operational metrics were used on ROS and Customs AEP to measure the impact of the projects on the business. Specific measures were as follows:

ROS

• Number of returns filed online (increase shows greater use of self-service facility); and

• Number of telephone queries (decrease shows greater use of ROS self-service facility)


AEP

• % Direct trader input for import and export, baselined against equivalent figures from the old system.

Recommendation 10 – Performance Management Framework

We recommend that Revenue develop a performance management framework for all its ICT projects which can be used as the basis for aligning metrics, key performance indicators, objectives and strategy. Revenue should consider including specific performance indicators for Contract, Project, and Operational performance.

A programme-wide approach should be considered, and coordinated through the planned Programme Management Office. This would provide a framework for considering KPIs across all programmes and managing dependencies and overlaps. It would also facilitate integration with the business case and benefits realisation management processes.

These should feed into the existing MIF framework.

Sample indicators are provided below:

Contract Performance

Examples of indicators that could be used to manage performance of external resources contracts include the following:

• Earned Value (for external resources expenditure);

• Quality (e.g. quantity and severity of software defects);

• Value added services (e.g. skills transfer completed against target); and

• Cost (estimates vs. actuals).

Project Management Performance

In addition to the existing measures for managing project performance (cost and time), the following may provide a more quantified assessment.

• Quality - number of software defects against a pre-defined target; and

• Skills development.

Operational Performance

The objectives for each project, and the alignment of these objectives with Revenue’s overall strategy were documented as part of this review. This can now be used as the foundation for setting baselines and targets, which can in turn be used to assess performance in the future. Performance can be reported using a balanced scorecard, which should be used to inform and drive management decisions.

Metrics provide basic information on the number of items or actions. These can be interpreted to provide performance indicators for the business. Based on the objectives documented for this report the following sample KPIs could be considered:

• Processing time saved (for various processes);

• Increased revenue collected;

• Reduced costs of document production and distribution; and

• Service levels being met.


Note that there may be significant overlap in the benefits delivered by different project investments. It may be useful to map the end-to-end processes to identify which benefits are being realised where, and to baseline and manage performance accordingly.

6.10 Continued Relevance and value for money The opinion of the review team is that the objectives continue to warrant expenditure on a current and on-going basis:

• The ICT systems already implemented are providing considerable efficiencies and services to internal and external customers. All ICT systems require ongoing maintenance to keep them up to date and compliant with current legislation and developments in technology, etc.; and

• There are several planned systems (as set out in the ICT strategy) yet to be delivered. These warrant continued external resources expenditure subject to detailed business case evaluation (c.f. recommendation 1 above).

Revenue’s ICT programme is complex, as set out in Section 4. There are no instant or simple alternative solutions to the strategies being adopted by Revenue in achieving their business and ICT objectives. Instead one needs to think of value creation as a set of continuous processes that over time yield improvements to value for money.

A number of the best practice techniques and tools discussed in this document have already been implemented by Revenue while others are in the process of being implemented. Based on an assessment of what was most appropriate for Revenue, Revenue has decided to implement only the most relevant and valuable components of the other suggested techniques. This is to be expected of an organisation that is relatively mature when it comes to major ICT programmes. To help with further evolution and improvement in value for money techniques, a range of “best practice” tools and techniques are set out in this report.

The key driver for many programmes/projects will continue to be either Government or EU legislative requirements that are not readily quantifiable in economic terms. While investments in such programmes/projects is mandatory, Revenue should, nevertheless, place value for money considerations at the centre of the implementation of these programmes/projects. Identification, quantification and measurement of value should form a key part of the business case, programme/project management, implementation and post-implementation review. This process should be supported by the Programme Management Office.

Each of the detailed recommendations in this report concerning governance, project management, business case, benefits realisation, quality assurance etc. can contribute to achieving such value for money.

Recommendation 11 – Overall Value for Money

Subject to the constraints in the selection of projects arising from the mandatory nature of Government or EU legislative requirements, the Revenue governance structures, particularly ITEX and Project Boards, should ensure that obtaining value is a key, measurable deliverable from programmes/projects.

Implementation of many of the other recommendations in this report will support this objective.


Appendix 1: Evaluation Framework

Overall Approach

The ICT profession has a significant body of knowledge, tools and standards which has been developed over many years of implementing ICT systems. While there are a number of generally accepted principles for good governance of project management, some of these methodologies overlap or are similar.

Most of the methods and frameworks are designed to be scalable, from small projects up to major investment programmes orders of magnitude larger than the ICT programmes carried out by Revenue. It may be useful therefore to adopt certain, but not all aspects, of the methods set out here. So for example, while it is important that a project management methodology be used – it is less important which specific methodology is being used so long as it substantially addresses the core requirements of good project management.

In carrying out our assessment we have followed a hierarchy of importance:

Method Importance

1 Compliance with legal commitments and government policy

Mandatory – Must adhere to these

2 Extent to which generally accepted ‘core’ ICT practices are being adopted and used

Should adhere to these

3 Extent to which advanced or best practices are being used

Revenue should evaluate and consider adopting these

Table A.1.1: Methods used in the Evaluation Framework

The methodologies used are outlined below.

Programme Logic Model

The overarching method used for this review is the Department of Finance Value for Money Framework. This recommends the use of the Programme Logic Model to provide a systematic and visual way to present and share understanding of the cause-effect relationships between inputs, activities, outputs and outcomes (results and impacts). The Programme Logic Model is used in planning, implementation, monitoring and evaluation of programmes. Adoption of this approach should enable programmes to be analysed in terms of inputs, activities or processes, outputs, and outcomes that are arranged to achieve specific strategic objectives. The Programme Logic Model and definitions of key elements are illustrated below.18

18 Department of Finance VFM Guidance Manual


Figure A.1.1: the Programme Logic Model

Table A.1.2: Programme Logic Model Outline

Other Evaluation Methods

The various facets of each programme were examined and evaluated against industry best practice tools and methodologies. The areas considered were as follows:

• Project, Programme and Portfolio Management;

• Governance;

• Contracts and Procurement;

• Quality and Risk Management; and

• Resources and Skills Management.

Where appropriate the industry best practice tools and methodologies were supplemented by proprietary Deloitte tools and methods.

Project, Programme and Portfolio Management

Primarily we used the Projects IN Controlled Environments (PRINCE2) methodology for comparison. This is the accepted standard within the European public sector for project management. This was supplemented with other leading project management methodologies such as Project Management Book of Knowledge (PMBOK) and Portfolio Landscape™, Deloitte’s portfolio management tool.


Governance

To evaluate governance the Control Objectives for Information and related Technology (COBIT) framework was used. COBIT is the standard for the management and delivery of high-quality information technology-based services by setting best practices for the process of value creation.

Contracts and Procurement

Contracts and procurement was evaluated using national and European government guidelines and industry best practice comparisons. The guidelines referenced in this evaluation were EU procurement guidelines, Department of Finance guidelines and the Irish National Public Procurement Policy Framework.

Quality and Risk Management (QRM)

QRM was evaluated using the Project Management Book of Knowledge (PMBOK) methodology. This is one of the leading internationally recognised project management methodologies with particular strength in the control of quality and risk.

Resources and Skills Management

For this section, the I&T Talent Management module of Deloitte’s CIO Management Framework™ Methodology was used. This provides a method for evaluating that the right resources are organised, available, and productive to meet IT plans and commitments in a cost-effective way.

Other

In addition to the standards used to evaluate Revenue against the areas above, a number of other standards, tools and methodologies were referenced in this evaluation. These included Information Technology Infrastructure Library (ITIL), the international standard for IT service management, Capability Maturity Model Integration (CMMI) in the area of process improvement, as well as Deloitte’s Project Management Method (PMM4).

Project, Programme, and Portfolio Management

Project Management involves the planning, execution and monitoring of individual projects within the programme. The focus of Project Management is measuring and improving project performance as well as tracking and escalating project issues and risks to ensure the timely delivery of desired results.

Programme Management is the consistent application of specific processes, tools and methods, to enable the coordination and delivery of the projects within the programme. It is about proactively planning to ensure that projects are executed in an effective and coordinated way. Programme Management is also concerned with implementing the business changes required to deliver the benefits, and not just project deliverables and outcomes. The core of Programme Management includes activities such as integrated planning of multiple projects, identification and understanding of dependencies, managing risks relating to complex interdependencies, maintaining a focus on the overall business benefits of the programme, and coordinating large and often dispersed project teams.

Portfolio management is the continual process of creating, managing, and evaluating a portfolio of strategic initiatives focused on delivering lasting results and benefits. The overall objective is to manage the portfolio in tandem with the continual evolution of the strategy of the business, and to ensure the maximum value from business investments. The organisation’s strategic aims and its portfolio of initiatives are very much interrelated, and drive one another. Adopting a portfolio approach to the selection, coordination, and


review of projects, with continual reshaping and refinement of the business strategy, will enable an organisation to manage the conflicting demands between its initiatives, and maximise the aggregate value of the portfolio.

Best Practice Project and Programme Management

The project management community has two flagship standards for project management: the Projects in Controlled Environments (PRINCE2) methodology from the British Office of Government Commerce and the Project Management Institute (PMI) Project Management Body of Knowledge (PMBOK). PRINCE2 is the accepted standard in UK Public Sector and is widely used throughout Europe. PMBOK originated from the US and is the most widely used technique worldwide.

For the purposes of this evaluation PRINCE2 was used as a basis for comparison, complemented by PMBOK where appropriate. In addition other methodologies (e.g. SSADM, RUP) were referred to for best practice input. The use of PRINCE2 and PMBOK as a part pf this evaluation does not represent a recommendation that these methodologies should be used by Revenue, but rather a guide to the kinds of tools, techniques and deliverables one would expect to see on ICT projects of the nature under evaluation in this report.

PRINCE2

PRojects IN Controlled Environments (PRINCE) is a structured method for effective project management for all types of project. The 2002 version (PRINCE2) has been through a number of incarnations in the past and has been adapted through feedback from the experience of projects, project managers and project teams. The PRINCE2 Introduction lists a significant set of reasons why projects fail, and the methodology sets out to remove these causes.

PRINCE2 is a process-driven project management method which defines 45 separate sub-processes and organises these into eight processes as follows:

• Starting Up a Project (SU);

• Planning (PL);

• Initiating a Project (IP);

• Directing a Project (DP);

• Controlling a Stage (CS);

• Managing Product Delivery (MP);

• Managing Stage Boundaries (SB); and

• Closing a Project (CP).


Figure A.1.2: Prince 2 Methodology

Starting up a project (SU)

In this process the project team is appointed and a project brief (describing, in outline, what the project is attempting to achieve and the business justification for doing so) is prepared. In addition the overall approach to be taken is decided and the next stage of the project is planned. Once this work is done, the project board is asked to authorise the next stage, that of initiating the project.

Planning (PL)

PRINCE2 advocates product based planning which means that the first task when planning is to identify and analyse products. Once the activities required to create these products are identified then it is possible to estimate the effort required for each and then schedule activities into a plan. There is always risk associated with any work and this must be analysed. Finally, this process suggests how the format of plans can be agreed and ensures that plans are completed to such a format.

Initiating a Project (IP)

This process builds on the work of the Start Up (SU) activity and the project brief is augmented to form a Business Case. The approach taken to ensure quality on the project is agreed together with the overall approach to controlling the project itself (project controls). Project files are also created as is an overall plan for the project. A plan for the next stage of the project is also created. The resultant information can be put before the project board for them to authorize the project itself.

Directing a Project (DP)

These sub-processes dictate how the Project Board should control the overall project. As mentioned above, the project board can authorise an initiation stage and can also authorise a project. Directing a project also dictates how the project board should authorise a stage plan, including any stage plan that replaces an existing stage plan due to slippage or other unforeseen circumstances. Also covered is the way in which the board an give ad hoc direction to a project and the way in which a project should be closed down.


Controlling a Stage (CS)

PRINCE2 suggests that projects should be broken down into stages and these sub-processes dictate how each individual stage should be controlled. Most fundamentally this includes the way in which work packages are authorised and received. It also specifies the way in which progress should be monitored and how the highlights of the progress should be reported to the project board. A means for capturing and assessing project issues is suggested together with the way in which corrective action should be taken. It also lays down the method by which certain project issues should be escalated to the project board.

Managing Product Delivery (MP)

This process consists of three sub-processes and these cover the way in which a work package should be accepted, executed and delivered.

Managing Stage Boundaries (SB)

The Controlling a Stage process dictates what should be done within a stage, Managing Stage Boundaries (SB) dictates what should be done towards the end of a stage. Most obviously, the next stage should be planned and the overall project plan, risk log and business case amended as necessary. The process also covers what should be done for a stage that has gone outside its tolerance levels. Finally, the process dictates how the end of the stage should be reported.

Closing a Project (CP)

This covers the things that should be done at the end of a project. The project should be formally de-commissioned (and resources freed up for allocation to other activities), follow on actions should be identified and the project itself be formally evaluated.


PMBOK Project Management Book of Knowledge PMBOK is a structured set of instructions that can be used in any project environment. It provides a five-phase framework, as illustrated below, outlining key activities and deliverables for each phase.

Planning Executing Monitoring & Controlling ClosingInitiating

• Acquire Project Team

• Develop Project Team

• Information Distribution

• Request Seller Responses

• Select Sellers

• Perform Quality Assurance

• Direct and Manage Project Execution

Time & Resource

Human Resources

Communication

Procurement

Quality & Risk

Cost

Scoping

Integration & Planning

• Develop Project Charter

• Develop Preliminary Scope Statement

• Develop Project Management Plan

•Schedule Control

• Manage Project Team

• Performance Reporting

• Manage Stakeholders

• Contract Administration

• Perform Quality Control

• Risk Monitoring and Control

•Cost Control

•Scope Verification

•Scope Control

• Monitor and Control Project Work

• Integrated Change Control

• Contract Closure

• Project Closeout

• Activity Definition• Activity Sequencing• Activity Duration

Estimating• Schedule Development

• Human Resource Planning

• Communications Planning

• Plan Purchases and Acquisitions

• Plan Contracting

• Quality Planning• Risk Management

Planning• Risk Identification• Qualitative Risk Analysis• Quantitative Risk Analysis• Risk Response Planning

•Cost Estimating

•Cost Budgeting

•Scope Planning

•Scope Definition

•Create WBS

Figure A.1.3: The PMBOK Framework


Portfolio Landscape™ This review examines eight areas of ITS developments in 2006. These could be considered a portfolio of related projects. A strong project portfolio management approach should allow the continuous alignment of initiatives with the strategic objectives of the organisation, given resources constraints and risk tolerances. Portfolio management does not have the maturity in existing standard methodologies as project and programme management. For reference the Deloitte portfolio management methodology (Portfolio Landscape) is shown below.

Gather project data using a standard project template in order to identify, categorize and consolidate portfolio components.

Evaluate the contents of the portfolio and select components to be prioritized.

Create a prioritized list of components in compliance with the objectives, constraints and thresholds.

Periodically establish the portfolio strategy into specific objectives and in quantifiable targets for the portfolio.

Develop and weigh value and risk criteria used in the prioritization process. Establish objectives, constraints and thresholds.

Projects and programs are monitored against their intended objectives. Performance information is then used for the project’s review and prioritization cycle to ensure that the whole portfolio is balanced on a regular basis.

Review portfolio level reports to determine whether changes need to be made. The objective being to optimize the portfolio to maximize the achievement of strategic objectives based on the desired risk profile.

Execute your portfolio based on the prioritized plan.

Strategy Translation

DevelopPrioritization

Model

CollectCollectProjectProject

InformationInformation

CollectProject

Information

Analyze Analyze PortfolioPortfolio

AnalyzePortfolio

PrioritizePrioritizePrioritizeProject &Programs

Optimize Portfolio &

Report

Deploy &ExecutePortfolio

Authorize & Allocate Budget

MonitorPrograms& Projects

Programs and projects are reviewed by individuals accountable for the delivery of the benefits and either authorized, rejected or postponed.

Fig A.1.4: Deloitte’s Portfolio Landscape Methodology


Governance

Control Objectives for Information and related Technology (COBIT) and Val IT The IT Governance Institute’s Control Objectives for Information and related Technology (COBIT), provides a comprehensive framework for the management and delivery of high-quality information technology-based services. It sets best practices for the means of contributing to the process of value creation. The IT Governance Institute has also developed Val IT, which complements COBIT by providing best practices methods to measure, monitor and optimise the realisation of business value from investment in IT.

COBIT has four domains and 34 processes. It helps to optimise IT-enabled investments, ensure delivery and provide a measure against metrics to judge when things can go wrong.

The business orientation of COBIT consists of linking business goals to IT goals, and providing metrics and maturity models to measure their achievement. It is also used to identify the associated responsibilities of business and IT processes. The four domains and corresponding processes within the COBIT infrastructure are described below.

Domain 1: Planning & Organisation1.Define a strategic IT plan

2.Define the information architecture

3.Determine the technological direction

4.Define IT organization and relationships

5.Manage IT investments

6.Communicate management aims and direction

7.Manage human resources

8.Ensuring compliance with external requirements

9.Assess risks

10.Manage projects

11.Manage Quality

1.Identify solutions

2.Acquire and maintain application software

3.Acquire and maintain technology architecture

4.Develop and maintain IT procedures

5.Install and accredit systems

6.Manage changes

Domain 3: Monitoring

Domain 2: Acquisition and implementation

Domain 4: Delivery and Support

1.Monitoring the processes

2.Assess internal control adequacy

3.Obtain independent assurance

4.Provide for independent audit

1.Define service levels

2.Manage third party services

3.Manage performance and capacity

4.Ensure continuous service

5.Ensure systems security

6.Identify and attribute costs

7.Educate and train users

8.Assist and advice IT customers

9.Manage the configuration

10.Manage problems and incidents

11.Manage data

12.Manage facilities

13.Manage operations

Table A.1.3: Domains and processes within the COBIT infrastructure


Information Technology Infrastructure Library (ITIL) ITIL is a best practice framework that deals with the processes, people and technology of an organisation that aid the implementation of a framework for IT Service Management (ITSM). ITIL provides a comprehensive, consistent and coherent set of best practice approaches for IT service management processes, promoting a quality approach to achieving business effectiveness and efficiency in the use of information services. ITIL provides organisations with a flexible and scalable approach to IT service management regardless of the type or size of the organisation. In each case there is a requirement to provide an economical service that is reliable, consistent and of the highest quality.

The ethos behind the development of ITIL is the recognition that organisations are becoming increasingly dependent on IT in order to satisfy their corporate aims and meet their business needs. ITIL provides the foundation for quality IT service management.

By improving the processes around IT, the organisation can begin to:

• Improve resource utilisation;

• Be more competitive;

• Decrease work;

• Eliminate redundant work;

• Improve upon project deliverables and time;

• Improve availability, reliability and security of mission critical IT services;

• Service quality cost justification;

• Provide service that meets customers, business and user demands;

• Integrate central processes;

• Document and communicate roles and responsibilities in service provision; and

• Provide demonstrable performance indicators.

ITIL provides Service Support and Service Delivery models, as illustrated below:

ITIL SERVICE SUPPORT PROCESS MODEL

Incident Management

Problem Management

ChangeManagement

Configuration Management

Release Management

The Organization, Customers and Users ITIL Component Goal

Incident Management To restore normal service operation as quickly as possible with minimum disruption to the business, thus ensuring that the best achievable levels of availability and service are maintained.

Problem Management To minimise the adverse effect on the business of incidents and problems caused by errors in the infrastructure, and to proactively prevent the occurrence of incidents, problems, and errors.

Change Management To ensure that standardised methods and procedures are used for efficient and prompt handling of all changes, in order to minimise the impact of any related incidents upon service.

Release Management To take a holistic view of change to an IT service and ensure that all aspects of a release, both technical and non-technical, are considered together.

Configuration Management

To provide a logical model of the IT infrastructure by identifying, controlling, maintaining and verifying the versions of all configuration items in existence.

Fig A.1.5 ITIL Service Support Process Model


ITIL SERVICE DELIVERY PROCESS MODEL

The Organization, Customers and Users

Service Level Management

Availability Management

Capacity Management

Financial Management

IT Service Continuity

ITIL Component Goal

Service Level Management

To maintain and gradually improve business aligned IT service quality through a constant cycle of agreeing, monitoring, reporting, and reviewing IT service achievements and through instigating actions to eradicate unacceptable levels of service.

Availability Management

To optimise the capability of IT infrastructure and supporting organisation to deliver a cost effective and sustained level of availability that enables the business to satisfy its objectives.

Capacity Management To understand the future business requirements (the required service delivery), the organisation’s operation (the current serviced delivery), the IT infrastructure (the means of service delivery), and ensure that all current and future capacity and performance aspects of the business requirements are provided cost effectively.

Financial Management for IT Services

To provide cost effective stewardship of the IT assets and the financial resources used in providing IT services

IT Service Continuity To support the overall Business Continuity Management process by ensuring that the required IT technical and services facilities can be recovered within required and agreed business time-scales.

Fig A.1.6: ITIL Service Delivery Process Model


Contracts and Procurement Procurement and contract management are key factors in achieving value for money when considering external resources expenditure. The evaluation of Revenue’s performance in these areas is based on a framework which references the following material:

EU Procurement Guidelines Ref. www.finance.gov.ie

Irish Guidelines for the engagement of consultants and other external support by the civil service This Department of Finance publication was produced to “help government departments, offices, and agencies to engage external support through a competitive procedure, to comply with national and EU public procurement policy and legislation; to put in place appropriate management processes for the successful completion of the project; to achieve the benefits that should subsequently accrue to the contracting authority and to do so in such a way that Value for Money is obtained.”

It provides detailed guidelines for the engagement process, from establishing the need through to managing the contract and project closure. Although this document was not available to guide the process for the engagement of consultants during the period under review, it provides a useful framework for the evaluation of the procurement and contract management processes. It provides information on requirements in the following areas:

• Competitive process;

• Request for tender;

• Evaluation of tenders;

• The contract;

• Managing the contract; and

• Project closure.

Achieving Value for Money in Public Expenditure, address by Mr. Brian Cowan TD, Minister for Finance As part of his speech at the Dublin Chamber of Commerce Annual Dinner in October 200519 , the minister outlined a series of steps to support value for money in public expenditure on IT projects and other initiatives. For the purpose of this report, they were used as the basis for the evaluation under the following headings:

• Awareness and proactive approach to improving the procurement and contract management processes;

• Review of contract performance;

• Fixed price contracts and contract extensions;

• Increased focus on competition for contracts; and

• Development of internal expertise in procurement and contract management.

19 Text can be found at: http://www.finance.gov.ie/viewdoc.asp?DocID=3561%20


http://www.finance.gov.ie/

http://www.finance.gov.ie/viewdoc.asp?DocID=3561%20

Irish National Public Procurement Policy Framework This document was published by the National Public Procurement Policy Unit and provides guidelines for the operation of a public sector procurement function. It provides the following model for a best practice corporate procurement plan.

Fig A.1.7 Irish National Public Procurement Policy Framework

The document states that relevant public bodies are expected to:

• Include procurement management reform as one of the key strategic priorities and aims as part of their statements of strategy or other key strategic documents;

• Develop an appropriate corporate procurement plan, including specific performance indicators, based on the procurement management reform objectives; and

• Develop a plan(s) for significant purchases arising from the annual corporate procurement plan.

It identifies the following core principles for procurement policy:

• Accountable;

• Competitive;

• Non-discriminatory and provide for equality of treatment;

• Fair and transparent; and

• Conducted with probity and integrity.


Programme-wide Evaluation Framework

Deloitte’s CIO Management Framework

Deloitte’s CIO Management framework gives an integrated view of the key disciplines, processes, organisation structures, performance measures and tools required to be a world class, value creating Information and Technology Management organisation. It is produced for IT executives of large organisations facing complex business issues.

The CIO Management Framework enables an organisation to:

• Address IT from a business perspective;

• Translate the role and responsibilities of IT into the processes, people (skills), organisation structures, tools, and metrics/measures required to support the business strategy and operations;

• Present a non-prescriptive, integrated framework linking leading edge business concepts (and continuously evolving sources of insight and ideas tailored for IT); and

• Include supporting tools to build and sustain a World Class IT Organisation.

Realize Value

Create Value

I&TOperations

Management

I&TOperations

Management

I&TTalent

Management

I&TTalent

Management

I&TProgram

Management

I&TProgram

ManagementI&T

DeliveryManagement

I&TDelivery

Management

I&TArchitectureManagement


I&TInnovation

Management

I&TInnovation

Management

I&T CustomerRelationshipManagement


I&TSourcing

Management

I&TSourcing

Management

I&T StrategyPlanning

Management


Management

I&TGovernanceManagement


Manage

C I O

I&T Eco-System ManagementPEI&T Value ManagementPV

I&T Risk ManagementPR

I&TBusiness

Management

I&TBusiness

Management

I&T M&A ManagementPM

I&T Shared ServicesPS IT and the LawPL

Realize Value

Create Value

I&TOperations

Management

I&TOperations

Management

I&TTalent

Management

I&TTalent

Management

I&TProgram

Management

I&TProgram

ManagementI&T

DeliveryManagement

I&TDelivery

Management



I&TInnovation

Management

I&TInnovation

Management



I&TSourcing

Management

I&TSourcing

Management


Management


Management



Manage

C I O

I&T Eco-System ManagementPE I&T Eco-System ManagementPEI&T Value ManagementPV I&T Value ManagementPV

I&T Risk ManagementPR I&T Risk ManagementPR

I&TBusiness

Management

I&TBusiness

Management

I&T M&A ManagementPM I&T M&A ManagementPM

I&T Shared ServicesPS I&T Shared ServicesPS IT and the LawPL IT and the LawPL

Human Resources

Enterprise Risk Management

ExecutiveCommittee

BusinessExecutives

Business Users

BusinessOperations


BusinessOperations


Business Users

Customers

Business Executives

Functions

Groups

BusinessOperations

R&D

Engineering

BusinessOperations

R&D

Engineering

Legend:

Procurement

BusinessOperations

Business Users

BusinessOperations

Business Users

ExecutiveCommitteeBusiness

OperationsEnterprise Risk Management

ExecutiveCommitteeBusiness

OperationsEnterprise Risk Management Corporate

DevelopmentFinance

Business Users

Procurement

ExecutiveCommittee

General Counsel

Fig A.1.8 Deloitte CIO Management Framework


The CIO Management Framework™ is a guide for IT organisations that want to improve their performance. Although the framework is an integrated set of disciplines, it can be deployed entirely or as required and can be utilised in establishing change imperative to design, deployment and performance measurement. It is divided into a number of disciplines or logical groupings of I&T processes, people, tools and measures that perform a set of services or serve a particular function. The following perspectives are included in the CIO Framework.

I&T Strategy Planning

Management

I&T Strategy Planning

Management

Set I&T direction and priorities (I&T Strategic Plan), monitor performance against plan, and reset direction as necessary

I&T Talent

Management

I&T Talent

Management

Ensure that the right resources are organised, available, and productive to meet IT plans and commitments in a cost-effective way

I&T Innovation

Management

I&T Innovation

Management

Design new products and services and/or new business models to build additional avenues for profitable growth

I&TOperations

Management

I&TOperations

Management

Operate and administer technology reliably and cost-effectively. Ensure business continuity at an acceptable level of risk.



Establish and manage various business and technology solutions and capabilities in order to enable business and IT strategies and goals including enhancing return, maximising performance, reducing risk and increasing agility



Define the right I&T products and services for improved customer satisfaction and business performance

I&TDelivery

Management

I&TDelivery

Management

Optimise development and delivery of I&T projects/programs and services on time, on budget, and with an acceptable level of risk

I&T Value Management

I&T Value Management

Describes the management of IT’s contribution to shareholder value. It is a function of capital investment optimisation (future expenditure) and IT efficiency (today’s expenditure).

I&T Sourcing

Management

I&T Sourcing

Management

Addresses all aspects of sourcing from the competitive I&T product market. Includes product and service procurement, sourcing strategy development, and vendor management.

I&T Risk Management

I&T Risk Management

Ensure enterprise security measures are integrated across I&T and the rest of the business and that I&T has developed business continuity approaches and techniques to protect sales, profits and brand identity.

I&TProgram

Management

I&TProgram

Management

Provides an enterprise-wide approach to identify, prioritise, and successfully execute a portfolio of projects, aligned with the organisation’s strategic objectives that deliver projects on-time, within reasonable cost/benefit expectations, and at an acceptable level of risk

I&T Eco-System

Management

I&T Eco-System

Management

Define and manage the company’s role and objectives in the “Extended Enterprise” (key trading partners).

I&TBusiness

Management

I&TBusiness

Management

Foundation for “configuring” and managing all aspects of IT required to “Run IT as a Business” and deliver against the IT strategy and plans.

I&T M&A

Management

I&T M&A

Management

Enables the realisation of merger benefits through thorough risk assessment, due diligence and effective management of systems integration, synergy capture and cost reduction following the close of a deal.

I&T GovernanceManagement

I&T GovernanceManagement

Ensure the leadership, structures and processes are in place so I&T sustains and extends the organisation’s strategies and objectives.

I&T and the Law

I&T and the Law

Describes the key characteristics of an I&T Shared Services environment


I&T

Shared ServicesManagement

I&T Shared Services

Management

Build and maintain effective compliance programs that remediate current risks and supports future regulatory changes.

Key:

Create ValueCreate Value

Manage ValueManage Value

Realize ValueRealize Value

PerspectivesPerspectives

Table A.1.4: Deloitte CIO Management Framework

Quality Management The PMBOK processes for Quality Management are illustrated below. Quality Planning, Quality Assurance, and Quality Control are three key areas within Quality Management.

Quality PlanningInputs

• Quality policy

• Scope statement

• Product description

• Standards and regulations

• Other process outputs

Tools and Techniques

• Benefit/cost analysis

• Benchmarking

• Flow-charting

• Design of experiments

Outputs

• Quality management plan

• Operational definitions

• Checklists

• Inputs to other processes

Quality AssuranceInputs


• Results of quality control measurements



• Quality planning tools and techniques

• Quality audits

Outputs

• Quality improvement

Quality ControlInputs

• Work results



• Checklists


• Inspection

• Control charts

• Pareto diagrams

• Statistical sampling

• Flow charting

• Trend analysis

Outputs

• Quality improvement

• Acceptance decisions

• Rework

• Completed checklists

• Process adjustments

Table A.1.5: Quality Management Overview

Quality planning

Quality planning is concerned with establishing policies and standards for the project. The output is a quality management plan, which describes organisational structures, responsibilities, procedures, processes, and resources needed to implement quality management.


Quality Assurance

Quality assurance processes are mainly concerned with planning and executing specific tests for known results. The “V” model for software quality assurance, as illustrated below, is widely used, and provides guidance on the timing of test planning and execution activities. Quality assurance activities are also relevant to all other project outputs, including specification documents, training manuals, etc.

1 ORT stands for Operational Readiness Testing and includes performance, conversion and non-functional testing.

2 UAT stands for User Acceptance Testing

Development

Analysis


Design






Requirements



ORT1/UAT2

Unit Testing

Coding/ Debugging


Development

Analysis


Design






Requirements



ORT1/UAT2

Unit Testing

Coding/ Debugging


Figure A.1.9: Quality Assurance Overview

Risk Management Evaluation Framework PMBOK defines risk management as the systematic process of identifying, analysing, and responding to project risk. It includes maximising the probability and consequences of positive events and minimising the probability and consequences of adverse events to project objectives. The PMBOK risk management processes are illustrated below.

Project Risk Management

Risk IdentificationRisk Management Planning Qualitative Risk Analysis

Risk Response PlanningQuantitative Risk Analysis Risk Monitoring and Control

Figure A.1.10: Risk Management Evaluation Framework

Inputs, tools and technologies, and outputs for each process illustrated above are used as the basis for evaluation in this section.


Appendix 2: Acronyms used in VFM report


• AEP: Automated Entry Processing is the Customs system for administering imports and exports. It is currently being replaced by a new system based on combining third party components from Bull France (elements of their eBiscus offering) with Revenue’s ITS framework.

• ACF: Automated Carry Forward System sets up a record for all PAYE customers based on the previous year’s data.

• ARP: Automated Remittance Processing is a comprehensive remittance scanning, imaging and processing system operated in the Collector-General’s Division.

• BASIS: A government portal to provide “Business Access to State Information and Services”.

• BCM: Business Continuity Management. Revenue and the Department of Agriculture.

• CAP/DTI: Common Agricultural Policy/Direct Trader Input. A joined-up eGovernment offering comprising services from Reach, Revenue and the Department of Agriculture.

• Case Management

o ACM: Audit Case Management is a Revenue application to manage the audit lifecycle of a case. It uses risk ratings from the ESKORT package for case selection.

o PCM: Prosecutions Case Management or PCM is a variant for prosecutions.

o Both are based on the original Active Intervention Management or AIM system.

• CAT: Capital Acquisitions Tax.

• CCP: Customer Contact Project, a programme initiated to improve customer service capabilities through technology solutions.

• CREST: Multi-currency electronic settlement system for UK and Irish securities.

• CRS: Common Registration System – a consolidated customer register for all tax paying entities and their agents.

• CT: Corporation Tax. CT Assessing – an application system for same running on our mainframe computer.

• DSFA: Department of Social and Family Affairs.

• eBroker: Model and technology for delivery of electronic public services in Ireland. See also Public Service Broker. Operated by the Reach agency.

• EMCS: EU scheme for an Excise Movement Control System.

• ESKORT: Risk Analysis Package from WMData. Built around an inference engine driven by business rules.

• FTP: File Transfer Protocol

• HMRC: Her Majesty’s Revenue and Customs Service. Tax and customs collection authority for the United Kingdom.

• IAC: Integrated Accounting.


• IVR: Interactive Voice Response.

• IBI: Integrated Business Intelligence is a combined portal and customer relationship management system, providing an intelligent front-end to our data warehouse, consolidating the various business intelligence tools and applications into a single framework.

• IC: Integrated Correspondence is the corporate Revenue application for managing paper-based and email correspondence – it includes document imaging. It is integrated with the VOIP based help desk, automatically ‘popping up’ recent correspondence on receipt of a telephone call.

• ICT&L: Revenue Division responsible for information and communications technology and eBusiness solutions.

• ITEX: IT Executive, a subgroup of the Management Advisory Committee.

• ITIL: Information Technology Infrastructure Library is a leading international standard for IT service management.

• ITP: Integrated Taxation Processing is a common transaction processing framework for all taxes and duties administered by Revenue.

• ITS: Integrated Taxation Services is the umbrella term for Revenue’s portfolio of integrated applications, including ITP, AIM and its derivatives, CRS, IBI etc.

• MIF: Management Information Framework. A Government initiative under SMI to measure organisational performance via a single framework for specifying, collating, presenting and distributing Management Information. A Revenue specific application solution which underpins and automates the MIF initiative in this Office.

• OASIS: Government portal to provide “On-line Access to Services, Information and Support”. Citizen rather than business focused.

• PPS: Personal Public Service (number).

• PSB: Public Service Broker (see eBroker)

• RCT: Relevant Contracts Tax

• RevNet: Revenue’s award winning intranet solution based around portal and search engines.

• RFA: The Revenue Forms Architecture is a set of standards, guidelines and computer code to allow component reuse between the ITS and ROS systems which are based on different generations of computer languages and tools.

• RIS: The Revenue Integration Service provides a secure, store and forward hub between public facing services, including Reach, ROS and channels such as SMS, and our back office applications such as ITS and iC.

• ROS: Revenue On-line Service. Secure Internet facility for file and pay and customer information. Real-time links to back office processing systems especially ITP.

• SAD: Single Administrative Document. A set of documents, replacing the various (national) forms for customs declaration within European Community, implemented on January 1st, 1988. The introduction of the SAD constitutes an intermediate stage in the abolition of all administrative documentation in intra European Community trade in goods between member states.

• SAFE: An evolving government programme to produce a Standard Authentication Framework Environment in Ireland. The programme addresses a unified registration service, proposals on cards/tokens, infrastructure reuse and interaction with the private sector, and associated applications.


• SDAS: Stamps Duty Application System. A turnkey solution developed by Bull for Revenue.

• SMS: Short Messaging Service.

• TRS: Tax Relief at Source system for calculating mortgage interest relief.

• VRT: Vehicle Registration Tax


Appendix 3: End User Survey

An end user survey of ITS systems users was conducted to get a view on the satisfaction of the end users with the new system. A total of 100 users were selected to answer the survey, from a mix of Grades, Divisions and Areas. In total there were 29 responses of which 22 were complete. This mix is illustrated in the table below:

The following mix of Grades responded to the survey:

GradeResponse

PercentResponse

CountHEO 34.48% 10EO 17.24% 5HTO 0.00% 0SO 0.00% 0TO 13.79% 4CO 34.48% 10

29answered question

Table A.3.1: Responses by Grade

The following mix of Division staff responded to the survey:

DivisionResponse

PercentResponse

CountCollector General 17.24% 5Border Midlands West Region 13.79% 4Dublin Region 24.14% 7East and Southeast Region 13.79% 4Large Cases 10.34% 3Southwest Region 20.69% 6

290

answered questionskipped question

Table A.3.2: Responses by Division


Staff from the following mix of Revenue Business Areas responded to the survey:

AreaResponse

PercentResponse

CountCompliance 13.79% 4Debt Management 13.79% 4Customer Services 31.03% 9VRT 13.79% 4P35 3.45% 1PAYE 13.79% 4ITS 3.45% 1Form 11 6.90% 2Other (please specify) 24.14% 7

29answered question

Table A.3.3: Response by Area

It should be noted that staff may work in more than one Business Area, so the response count is greater than 29.

answer options Strongly Disagree Disagree er Agree nor Disa Agree Strongly Agree Don't Know Rating AverageResponse

Count

The systems make certain tasks easier to do. 0 0 0 17 5 0 4.23 22

The systems allow me to complete certain tasks more quickly. 0 0 2 15 5 0 4.14 22

The improved systems allow me to put my time to better use. 0 1 3 15 3 0 3.91 22

There are important aspects of my particular tax area that are not yet supported by the improved technology.

0 4 6 8 4 0 3.55 22

I have been adequately trained in the parts of the systems relevant to me. 0 6 5 9 2 0 3.32 22

The transition from old systems to new systems was smooth and the disruption to my job was minimised.

1 6 2 12 0 1 3.19 22

Live issues with the systems are dealt with quickly and efficiently. 1 6 3 12 0 0 3.18 22

I am satisfied with the performance of the new systems in terms of functionality. 0 2 4 15 1 0 3.68 22

I am satisfied with the performance of the new system in terms of response times. 0 3 1 16 2 0 3.77 22

I am satisfied with the level of support received for the application. 1 3 4 13 1 0 3.45 22

3227

Please enter comments if appropriate (no more than 250 characters)answered question

skipped question

Table A.3.4: Survey Questions


Average Rating of Responses

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

.The systems make certain tasks easier to do

The systems allow me to complete certain tasks more.quickly

The improved systems allow me to put my time to better.use

There are important aspects of my particular tax area.that are not yet supported by the improved technology

I have been adequately trained in the parts of the.systems relevant to me

The transition from old systems to new systems was.smooth and the disruption to my job was minimised

Live issues with the systems are dealt with quickly and.efficiently

I am satisfied with the performance of the new systems.in terms of functionality

I am satisfied with the performance of the new system in.terms of response times

I am satisfied with the level of support received for the.application

Rating

Fig A.3.1: Average rating of responses

10 questions were asked in this survey. Below is a commentary on the responses:

Q1: The systems make certain tasks easier to do.

In general the response to this was positive with 17 ‘agrees’ and 5 ‘strongly agrees, resulting in an average score of 4.23 (out of 5). This indicates that there has been an improvement in the ability of the systems to allow them to perform their roles.

Q2: The systems allow me to complete certain tasks more quickly.

In general the response to this was positive with 15 ‘agrees’ and 5 ‘strongly agree, resulting in an average score of 4.14. Two users replied ‘neither agree nor disagree’. From this we deduct that the new developments have improved the users’ ability to perform their tasks.

Q3: The improved systems allow me to put my time to better use.

Again the response was positive with 15 ‘agrees’, 3 ‘strongly agrees’ and 3 ‘neither disagree nor agree’. One user disagreed with this statement. The average score was 3.91. This is in keeping with questions 1 and 2 above, showing a general satisfaction with system functionality and speed.

Q4: There are important aspects of my particular tax area that are not yet supported by the improved technology.

The response to this was mixed with 4 ‘disagrees’, 6 ‘neither agree nor disagree’, 8 ‘agree’ and 4 ‘strongly agree’, for an average score of 3.55. It would appear from this that there are still some areas that can still be improved for end users and that not all areas are covered. The


fact that over 50% of respondents agreed with this statement would indicate that some change requests may need to be implemented for certain releases.

Q5: I have been adequately trained in the parts of the systems relevant to me.

Half of respondents either ‘agree’ or ‘strongly agree’ (9 & 2 respectively), 5 ‘neither agree nor disagree’ and 6 ‘disagree’ with this statement. This indicates that while most people are happy with their training, there is a significant percentage (27%) that feels that they haven’t been adequately trained and this needs to be addressed.

Q6: The transition from old systems to new systems was smooth and the disruption to my job was minimised.

More than 50% of respondents (12) agreed with this statement, 2 answered ‘neither agree nor disagree’, and 7 either disagreed or strongly disagreed for an average of 3.19. This indicates that some issues were encountered in the changeover to the new systems.

Q7: Live issues with the systems are dealt with quickly and efficiently.

The response to this question was almost identical to that of question 6 above. With 12 ‘agree’, 3 ‘neither agree nor disagree’, 6 ‘disagree’ and 1 ‘strongly disagree’. The correlation points to some issues in the new systems that left end users unhappy.

Q8: I am satisfied with the performance of the new systems in terms of functionality.

The response to this question was generally positive with an average score of 3.68. This indicates that the users are happy with the functionality of the new system.

Q9: I am satisfied with the performance of the new system in terms of response times.

Again the majority of the users are happy with performance, 18 either agree or strongly agree responses. 3 users disagreed, giving an average score of 3.77. this is in line with question 8 above.

Q10 I am satisfied with the level of support received for the application.

Most users were happy with the level of support (14), but a significant number (4) were unhappy. The average score of 3.45 indicates that the level of satisfaction is not the same as for the functionality and performance of the system.

Conclusion

Overall it would appear that while users are very happy with the functionality, usability and performance of the new systems they use, that there are some issues. There is a lack of confidence in the training received and some are unhappy with the support of the new system. The users identified a number of live issues that are in the process of being addressed through further training and/or modifications. This is to be expected in the context of so much development work.


Appendix 4: Comparators Questionnaire The following is the questionnaire developed for the comparator organisations.

1. Introduction

a. Purpose of Value for Money study

b. Deloitte’s role and objectives for this meeting

2. New Zealand Inland Revenue background

a. Demographics

b. Tax regime

c. Total Revenue Collected 2006

d. Maturity of IT systems

3. Approach to IT development and service delivery

a. Internal vs. external resources (numbers, skills)

b. Development

c. Maintenance

d. Support (i.e. infrastructure, etc.)

4. Objectives, expectations, and benefits from external resource expenditure

a. What types of services do you use external IT resources for?

• Projects (New developments)

• Maintenance

• Consultancy and Advice

b. What benefits have you realised from the use of external resources?

c. How do you manage and measure benefits from using external resources?

d. What drives the decision to outsource?


5. New Zealand Revenue comparative information

a. Total No of employees

b. Total ICT expenditure

c. Total ICT expenditure on external resources (consultants, contractors)

d. Number of firms from which external resources are procured

e. Ratio of Internal ICT staff to external resources (consultants & contractors)

f. Maintenance cost as a percentage of development cost

g. Maintenance headcount as a percentage of development headcount

6. Programme management and governance

a. What governance structures do you have in place to manage external resources?

b. What methodologies do you use? Do you require your methodology to be used, or allow methodologies from external firms?

c. Do you use mixed Inland Revenue or external teams? How are the teams managed (by internal or external resources)?

7. Procurement and contracts

a. Do you manage Information Technology external resources expenditure centrally?

b. What approach do you take to agreeing contract types (fixed price, time and materials, risk/reward)?

c. Do you have a policy for contract renewals and extensions?

d. Do you use a framework model for selecting providers to best meet your requirements?

e. Who is responsible for quality and risk management

f. What is your approach to skills transfer

8. Performance indicators

a. What measures do you use for the performance of external resources?

9. Any other relevant information or views


Appendix 5: VFM Stakeholder Meetings Role Name Time Location Status

Director ICT&L Liam Ryan (Asst Sec) 22/05 12:00

Dublin Castle Scheduled

Chairmen of the Project Boards*

- AEP Eamonn Fitzpatrick (Asst Sec)

21/05 11:15

Dublin Castle Complete

- ITS/PAYE Niamh O’Donoghue (Asst Sec)

21/05 08:45


- ROS Denis Graham (Asst Sec)

21/05 10:00


Chairman of ITEX Michael O’Grady (Commissioner)

28/05 12:00


Collector General Gerry Harrahill (Asst Sec)

15/05 14:00

Ship Street Complete

Chairman of the Revenue Commissioners

Chairman Daly 06/06 10:00


End Users

- AEP No end users Complete

- ITS/PAYE Check notes Complete

- ROS Check notes Complete

Accenture Partners

- Revenue Commissioners (Client Partner)

David Regan 07/06 16:30


- AEP (Project Partner) Paul Duff 07/06 16:30

Accenture Complete

- ITS/PAYE (Project Partner) Dave Regan 07/06 16:30

Accenture Complete

- ROS (Project Partner) Paul Duff 07/06 16:30

Accenture Complete

External Evaluation Assessor

Carol Moore 15/05 12:30



Appendix 6: Detailed Alignment with Objectives

Project/ Application area

Revenue’s Strategic Objectives

Goal 1: Ensure Compliance Goal 2: Capable, flexible, results-oriented Goal 3: Play part nationally ainternationally


Confront and reduce evasion, avoidance, and non-compliance

Develop our people



technology


Play our pinternation

ITS Business Taxes A number of new work-items were created for CT, IT and PAYE.

Screening periods for RCT, Prem and VAT estimates were removed.

Highlighting cases that have already gone through the case management process.

P35 letter to new Prem cases.

A new RCT letter was produced to target cases where the annual RCT35 return was less than the declared monthly RCT30 returns.

A new RCT risk indicator was also developed.

Raising surcharges on late CGT returns.

No developments in this area.

Work-items for ROS customer were prioritised.

Showing further Debits/Credits stopping conditions online.

Mass approval of RCTDC’s provided.


Basic name and address interface to the DSFA.

No developmethis area.

PAYE No developments in this area.

Capping service charges from local authorities.


Preliminary bulk issue of PAYE certs to employers.

Employee certs issued via ROS.


Processing of benefit information from the DSFA.








Develop our people



technology



Case Management Enhancements to Case Select helped to target riskiest cases for a more focused approach to case-working

ICM facilitated more ease and speed with case-working. PCM enhancements facilitated preparation of better prosecution cases

Facilitated more targeted approach to working the riskiest cases

Furthered the knowledge of caseworkers by providing more intelligent links between applications and other data sources

Business Intelligence Provides high-level view of risk across an ever increasing number of profiles to allow revenue staff exclude compliant customers more easily without accessing the more detailed views in the operational systems.

IBI supports targeting and more efficient use of resources by making it easier to identify customers where the risk profiles suggest the likelihood of non-compliance through to evasion.

Provide relevant information to staff to allow better evidence based decision-making.

Supportsautomated processing of data and information received without revenue identifiers.

Support for the campaign on the Construction Industry.

Technical Architecture/ Standards

Customs AEP


MIF No developments in this area.




Provide Revenues Management

By contributing to the reform of financial








Develop our people



technology



with an integrated view of financial and non financial information to measure and improve our performance

management across the civil service.

TRS No developments in this area.




TRS Refunds development enabled a more streamlined approach to refunds by electronically facilitating refunds.




Appendix 7: Quality Assessment by External Evaluator

Ms. Carol Moore of C. Moore and Associates Limited conducted an independent quality assessment of this review. This assessment and findings are contained overleaf.


CM

Evaluation of

Value for money review of

External Resources Expenditure

C Moore & Associates Ltd December 2007

113 Marian Road

Rathfarnham

Dublin 14

Phone: 087 647 8604

Email: [email protected]


mailto:[email protected]

Table of Contents

1. Executive Summary 2

2. Findings on

i. Report presentation and layout 3

ii. Scope of report 3-4

iii. Research methodology 5-6

iv. VFM results 6

v. Recommendations 7

vi. Constraints impacting VFM preparation 8

3. Recommendations as to future operation of the VFM process 8


1. Executive Summary Introduction

C Moore & Associates Ltd were commissioned by the Revenue Commissioners (Revenue) to provide an independent assessment of the Value for Money review (VFM) on the Revenue’s use of external IT resources. This document outlines our findings based on reviewing the report and discussions with Revenue.

Significant resources were committed to the VFM in a systematic and detailed manner. A joint Revenue and external consultant team were assigned to the review. Substantial data was gathered in a number of ways such as workshops, desk-top analysis of project documentation & minutes of user representative bodies, interviews and web survey. The team also completed comparisons with other external organisations.

A detailed project plan was prepared. The scope and methodology of the report is comprehensive and well organised. The objectives of the various projects were identified and key performance indicators, costs and benefits were evaluated.

Findings

The report’s findings and recommendations are firmly based on gathering evidence and are well balanced. The report correctly concludes the objectives of the external resources expenditure remain valid.

Recommendations

The report makes the following recommendations which we believe are reasonable and relevant.

1. Full implementation of a new formal business case for investments over €250,000

2. Full implementation of a formal benefits realisation tracking and monitoring process

3. Implement Revenue’s multi sourcing strategy and other procurement improvements

4. Rapid roll out of Revenue’s new Quality and Assurance function

5. Further implementation of Revenue’s IT human resources strategy

6. Further improvements in governance arrangements

7. Further improvements in project management

8. Rapid roll out of proposed Programme Management Office

9. Further improvements in utilisation of external resources.

Revenue have already taken action on these recommendations.

Conclusion

The VFM review has been completed in a professional and comprehensive manner, with full user acceptance as evidenced by action on the report’s recommendations.


2. Findings

No. Area of quality assessment Conclusion

I. Report presentation and layout

1. Overall, is the report well organised and clearly written?

2. Are features such as the description of the programme and the explanation of the research methodology presented transparently in the report?

Yes, Clear with logical sections, indexed and executive summary

Yes

II. Scope of report

3. Does the report address the entire programme under consideration?

4. Are links with other programmes discussed (cross cutting issues)?

5. Are expected outputs and impacts examined?

6. Are any unforeseen results and outcomes addressed?

7. Is the sustainability of the benefits generated by the programme assessed?

8. Is a risk assessment performed e.g. what happens if the programme assumptions or social environment change?

9. Does the report deal with the question of whether the programme will still

be relevant in the future?

10. Does the report examine the budgetary aspects of the programme being evaluated and its cost-effectiveness/cost benefit analysis?

Review covered external expenditure on IT projects as this was more applicable.

Yes. Applicable context is linkages to Revenue’s strategic objectives

Yes. For each IT project under consideration.

Yes. Data capture methodology ensured any unforeseen results & outcomes would be identified. No unforeseen issues came to light.

Yes. For each IT project under consideration.

Yes. Review of risk management performed in section 6.4.4

Yes. See section 6.10

Yes. For each IT project under consideration examines cost-effectiveness/cost benefits.



11. Does the report attempt to identify objectives which are SMART?

Specific

Measurable

Achievable

Relevant

Trackable

12. Are these objectives evaluated against broader Departmental or Governmental goals and strategies?

13. Are the Terms of Reference appropriate to the value for money review?

14. Does the VFM report comprehensively address the terms of reference?

Yes. See section 4 where objectives identified for each IT project.

Yes. See section 4 and Appendix 6.

Yes.

Yes.



III. Research methodology

15. Is the VFM analytical and based on recognised research techniques?

16. Is the VFM reliable and reproducible by a different evaluator with access to the same data and using the same methods of data analysis?

17. Did the VFM design allow information (on outputs, impacts) to be obtained that can reasonably be attributed to the programme?

18. Is the VFM issue-oriented addressing important issues relating to the programme, including its relevance, efficiency and effectiveness?

19. Were key performance indicators (KPI’s) used appropriately

a. Were they relevant?

b. Was efficiency and effectiveness measured?

c. Was utility measured- (the programme’s impacts compared to the needs of the population)?

d. Was sustainability measured (the extent to which positive changes can

be expected to last after the programme has terminated)?

20. Does the report attempt to identify KPI’s where there are gaps in existing measures?

21. Were any weaknesses of the employed methodology pointed out? e.g. data accuracy weaknesses

22. Is there any comparison to external agencies including benchmarking and specific benchmarks review?

23. Are implicit as well as explicit assumptions identified and reviewed for appropriateness?

Yes. Variety of techniques used with wide range of stakeholders including end users

Yes.

Yes.

Yes.

Yes.

Yes.

Yes.

Yes.

(See section 6.9 for above)

Yes. Sample indicators provided in section 6.9

Yes. E.g. Noted due to recent introduction of AEP it was not possible to draw longer term conclusions.


Yes. Under the continued relevance heading the environment/context was reviewed.



24. Is the VFM user-driven – that is a successful VFM should be designed and implemented in ways that provide useful information to decision-makers, given the political circumstances, programme constraints and available resources?

Yes.


IV. VFM results

25. Does the report consider deadweight, displacement and substitution effects?

Yes. Concludes that due to the scale & complexity of Revenue ICT’s projects & systems and the need to implement quickly, additional resources were required.



V. Recommendations

(Are the report’s conclusions and recommendations credible?)

26. Are findings based firmly on evidence?

27. Are conclusions systematically supported by findings?

28. Are recommendations made which identify potential savings or alternative delivery mechanisms or other options with related benefits?

29. Does the report outline the steps required to implement the recommendations?

30. Are recommendations adequately derived from conclusions and reasonable?

31. Does the report conclusion provide a balanced view of successes and shortfalls in performance and underlying causes?

32. Does the report address potential future performance indicators that might be used to better monitor the performance of the programme?

33. Are the conclusions and recommendations of the VFM supported by the analysis carried out?

34. The report should include any recommendations identified relating to the process of VFM of the initiative.

Yes.

Yes.

Yes.

Some recommendations already in the course of being implemented. Preface of report outlines actions being taken.

Yes.

Yes.


Yes.

Included. For example the recommendations regarding a new formal business case process & benefits realisation will aid future VFM.


VI. Constraints impacting VFM preparation

Recent introduction of AEP

Standardisation

Establishing Business Benefits

Due to the relatively recent introduction of AEP it was not possible to assess the long term benefits.

There was no single standardised format that addressed all elements of a business case and business benefits. However objectives, costs and benefits for each project were well understood and documented.

It can be difficult to establish business benefits of IT projects driven by legislative and maintenance requirements.

3. Recommendations as to future operation of the VFM Process.

1. No specific recommendations made, but if proposed recommendations in the report are fully implemented this will greatly assist future VFM reviews; and

2. Recommendation 9 refers to a strategy of “growing back skills”. Section 6.8 expands on this as follows

“ A key element of Revenue's strategy in relation to the development of internal ICT capacity is to grow back the architecture and technical designer layer which was eroded over the last decade through promotion and loss of experienced staff and compounded by difficulties in the recruitment and retention of IT specialists across the public service. Revenue has started to address this issue largely through the recruitment of administrative officers and graduates to ensure that it retains control of its ICT strategy and architecture. The ongoing implementation of Revenue's IT HR policy focussing on training, career development and succession planning for this core layer of in-house specialists will ensure that Revenue retains control of its ICT portfolio”.

This makes it clear that in any future VFM review of this area, the extent to which Revenue has succeeded in developing an appropriate internal IT capacity should be a matter for examination.

The procurement issues identified and procurement models proposed in the ICT strategy 2006-2008 (section 6.3.2) will greatly assist any such future VFM review as will the information contained in the current VFM review.

It will then be useful to perform a high level comparison of the costs and benefits of the expanded internal IT capacity versus the cost and benefits of use of external resources in relevant situations.


Documents

Value for Money and Policy Review of Information ...s3.amazonaws.com/zanran_storage/ · Working Group, principally Audrey ... contracts for external resources. 1 Mr. Eug ene C reighton